Question

1. ABC Corporation owned a business warehouse that was destroyed by fire on October 1, 2020....

1. ABC Corporation owned a business warehouse that was destroyed by fire on October 1, 2020. On December 1, 2020 the corporation received an insurance payment of $900,000 for the loss. The corporation’s basis in the warehouse just prior to the loss was $500,000. The corporation would like to use the involuntary conversion rules to defer as much gain as possible. Assume the corporation built a new warehouse on the old site within the required timeframe and incurred construction costs of $950,000.

How much gain would be taxable?

What would be the corporation’s basis in the new building?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
ABC Corporation owned a business warehouse that was destroyed by fire on October 1, 2020. On...
ABC Corporation owned a business warehouse that was destroyed by fire on October 1, 2020. On December 1, 2020 the corporation received an insurance payment of $900,000 for the loss. The corporation’s basis in the warehouse just prior to the loss was $500,000. The corporation would like to use the involuntary conversion rules to defer as much gain as possible. Assume the corporation built a new warehouse on the old site within the required timeframe and incurred construction costs of...
Teresa’s manufacturing plant is destroyed by fire. The plant has an adjusted basis of $270,000, and...
Teresa’s manufacturing plant is destroyed by fire. The plant has an adjusted basis of $270,000, and Teresa receives insurance proceeds of $410,000 for the loss. Teresa reinvests $420,000 in a replacement plant. a. Calculate Teresa’s recognized gain if she elects to utilize the involuntary conversion provision. $ b. Calculate Teresa’s basis in the new plant.
Problem 8-21 (Algorithmic) Involuntary Conversions (LO 8.12) Teresa's manufacturing plant is destroyed by fire. The plant...
Problem 8-21 (Algorithmic) Involuntary Conversions (LO 8.12) Teresa's manufacturing plant is destroyed by fire. The plant has an adjusted basis of $281,800, and Teresa receives insurance proceeds of $422,700 for the loss. Teresa reinvests $443,835 in a replacement plant within 2 years of receiving the insurance proceeds. If an amount is zero, enter "0". a. Calculate Teresa's recognized gain if she elects to utilize the involuntary conversion provision. b. Calculate Teresa's basis in the new plant.
Kitty’s factory building, which has an adjusted basis of $475,000, is destroyed by fire on April...
Kitty’s factory building, which has an adjusted basis of $475,000, is destroyed by fire on April 8, 2020. Insurance proceeds of $500,000 are received on June 1, 2020. She has a new factory building constructed for $490,000, which she occupies on October 1, 2020. Assuming Kitty’s objective is to minimize her current-year tax liability, calculate her recognized gain or loss and the basis of the new factory building.
Problem 9-07 On April 15, 2021, fire damaged the office and warehouse of Wildhorse Corporation. The...
Problem 9-07 On April 15, 2021, fire damaged the office and warehouse of Wildhorse Corporation. The only accounting record saved was the general ledger, from which the balance sheet data below was prepared. WILDHORSE CORPORATION MARCH 31, 2021 Cash $21,180 Accounts receivable 38,980 Inventory, December 31, 2020 72,870 Land 36,180 Buildings 115,250 Accumulated depreciation $44,388 Equipment 3,811 Accounts payable 24,794 Other accrued expenses 1,640 Common stock 103,800 Retained earnings 56,140 Sales revenue 139,600 Purchases 56,140 Miscellaneous expense 25,951 $370,362 $370,362...
1) Oscar Olson, single, purchased a residence on February 19, 2017, for $170,000. On September 7,...
1) Oscar Olson, single, purchased a residence on February 19, 2017, for $170,000. On September 7, 2019, a tornado completely destroyed his home. The home was insured for its replacement value, and homes in Oscar’s area had appreciated greatly. He received proceeds of $400,000.                a. How much does Oscar exclude and recognize?                b. If Oscar instead had received proceeds of $525,000, how much gain would be excluded and recognized? How much of a replacement residence would have to...
On April 15, 2021, fire damaged the office and warehouse of Whispering Corporation. The only accounting...
On April 15, 2021, fire damaged the office and warehouse of Whispering Corporation. The only accounting record saved was the general ledger, from which the balance sheet data below was prepared. WHISPERING CORPORATION MARCH 31, 2021 Cash $21,860 Accounts receivable 43,040 Inventory, December 31, 2020 77,390 Land 31,880 Buildings 118,120 Accumulated depreciation $37,414 Equipment 3,738 Accounts payable 22,698 Other accrued expenses 35,483 Common stock 90,800 Retained earnings 56,770 Sales revenue 134,410 Purchases 56,770 Miscellaneous expense 24,777 $377,575 $377,575 The following...
On April 1, 2020, Republic Company sold equipment to its wholly owned subsidiary, Barre Corporation, for...
On April 1, 2020, Republic Company sold equipment to its wholly owned subsidiary, Barre Corporation, for $40,000. At the time of the transfer, the asset had an original cost (to Republic) of $60,000 and accumulated depreciation of $25,000. The equipment has a five year estimated remaining life.Barre reported net income of $250,000, $270,000 and $310,000 in 2020, 2021, and 2022, respectively. Republic received dividends from Barre of $90,000, $105,000 and $120,000 for 2020, 2021, and 2022, respectively. 17.        What...
On April 1, 2020, Republic Company sold equipment to its wholly owned subsidiary, Barre Corporation, for...
On April 1, 2020, Republic Company sold equipment to its wholly owned subsidiary, Barre Corporation, for $40,000. At the time of the transfer, the asset had an original cost (to Republic) of $60,000 and accumulated depreciation of $25,000. The equipment has a five year estimated remaining life. Barre reported net income of $250,000, $270,000 and $310,000 in 2020, 2021, and 2022, respectively. Republic received dividends from Barre of $90,000, $105,000 and $120,000 for 2020, 2021, and 2022, respectively. 17. What...
Ivanhoe Corporation is a privately owned company that uses ASPE. On January 1, 2020 Ivanhoe’s financial...
Ivanhoe Corporation is a privately owned company that uses ASPE. On January 1, 2020 Ivanhoe’s financial records indicated the following information related to the company’s defined benefit pension plan: Defined Benefit Obligation $1,340,000 Pension Plan Assets 1,490,000 Ivanhoe Corporation’s actuary provided the following information on December 31, 2020: Current year service cost $83,000 Prior service cost, granted Jan 1, 2020 189,000 Employer contributions for the year 94,000 Benefits paid to retirees 26,000 Expected return on assets 5% Actual return on...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT