Gus Lawrence sold his warehouse to a public utility for $24,000 under a threat o
ID: 2602119 • Letter: G
Question
Gus Lawrence sold his warehouse to a public utility for $24,000 under a threat of condemnation. He originally paid $25,000 for the property and spent an additional $1,000 for a new roof. He had claimed $3,600 depreciation. In conjunction with the condemnation award, Gus paid $200 in legal fees. Gus:
Recognizes no gain on the property because of the condemnation.
Recognizes no gain on the property if, within the replacement period, he pays $30,000 for a different warehouse.
Recognizes no gain on the property if, within the replacement period, he pays $20,000 for a different warehouse.
Realizes no gain on the property if, within the replacement period, he pays $30,000 for a different warehouse.
Gus Lawrence sold his warehouse to a public utility for $24,000 under a threat of condemnation. He originally paid $25,000 for the property and spent an additional $1,000 for a new roof. He had claimed $3,600 depreciation. In conjunction with the condemnation award, Gus paid $200 in legal fees. Gus:
Explanation / Answer
Answer is option (2) Recognizes no gain on the property if, within the replacement period, he pays $30,000 for a different warehouse. No Recognised gain if the following Conditions are satisfied 1. Investment in Different ware house made within replacement period 2. Amount invested in new warehouse is Exceeds proceeds in the Option (2) two conditions are satisfied as the Investment in different warehouse made exceeds the proceeds from sale and that invesmtnet has been made within replacement period
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