d. Both a and b.
*e. All of the above.
78. Real property where Paul Peterson's warehouse is located is
completely destroyed by fire on November 23, 2013. Paul purchased the
warehouse in 2007 for $800,000; its adjusted basis in the warehouse is
$420,000. He receives $1 million from the insurance company on March 5,
2014. What amount must Paul reinvest in qualified replacement property
and be able to defer the entire $580,000 realized gain from the
79. Susan Short's office building is destroyed in a fire. The adjusted
basis in the building is $200,000 and its fair market value is
$350,000. The insurance company reimburses Susan $330,000 for its loss,
and she immediately purchases a new office building for $310,000. What
is Susan's recognized gain and adjusted basis in the new office
*a. $20,000 and $200,000, respectively.
b. $0 and $310,000, respectively.
c. $0 and $330,000, respectively.
d. $20,000 and $310,000, respectively.
e. None of the above.
80. A corporation exchanges machinery plus $20,000 cash for new
machinery worth $34,000. At the time of the exchange, the corporation's
adjusted basis in the machine it exchanges is $16,000 and its fair
market value is $14,000. What amount will the corporation recognize on
the exchange and what will be its depreciable basis in the new machine?