This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: $25,000-$16,000=$9,000 (Adjusted basis) b.) Calculate the recomputed basis of the property $9,000+$16,000=$25,000 (Recomputed basis) c.) Calculate the amount of ordinary income under Section 1245. Ordinary gain $35,000-$9,000=$26,000 (ordinary gain) d.) Calculate the Section 1231 gain $26,000-$16,000=$10,000 (section 1231 gain) 11. Teresa's manufacturing plan is destroyed by fire. The plant has an adjusted basis of $260,000, and Teresa receives insurance proceeds of $400,000 for the loss. Teresa reinvests $425,000 in a replacement plant. a.) Calculate Teresa's recognized gain if she elects to utilize the involuntary conversion provision. 400,000 425,000 = 0 b.) Calculate Teresa's basis in the new plant. Reinvestments $425,000 Less: Adjusted basis $260,000 Balance $165,000 Less: 25,000 (extra over insurance) $25,000 Realized Gain $140,000...
View Full Document
- Spring '10