basis Taxpayer\'s office building with an adjusted ba of $550,000 and a fair mar

Question

basis Taxpayer's office building with an adjusted ba of $550,000 and a fair market value of $975,000 is condemned on December 31, 2017. He receives a condemnation award of $950,000 on March 1, 2018. Taxpayer builds a nevw office building at a cost of $930,000 which is completed and paid for on December 30, 2018. What is taxpayer's recognized gain on receipt of the condemnation award and basis for the new office building? a $20,000; $550,000 b $0 $530,000 c $0 $930,000. d $400,000; 930,000. e Some other amounts

Explanation / Answer

Answer : a) $20,000 ; $550,000

TaxPayer's Recognised Gain

Taxpayer's Recognised Gain is difference between the Condemnation Award and the Cost of the new building

$ 950,000 - $ 930,000 = $ 20,000

Basis for New Office Building

Basis of new building remains same as the old one, since the condemnation award is received.

Basis of new office building is $ 550,000

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