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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.

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