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Calculate Teresa basis in the new plant

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Reference no: EM132703185

Problem - 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 within 2 years of receiving the insurance proceeds.

Required -

a. Calculate Teresa's recognized gain if she elects to utilize the involuntary conversion provision.

b. Calculate Teresa's basis in the new plant.

Reference no: EM132703185

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