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What amount of the insurance proceeds is taxable to prime

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Question - Prime Corporation's building was destroyed by a tornado. The fair market value of the building at the time of the tornado was $400,000 and its adjusted basis was $350,000. The insurance proceeds totaled $500,000 as follows

-$400,000 for the building

-$100,000 for lost profits during rebuilding.

Prime does not defer any gain under the involuntary conversion provisions of Code Sec. 1033

What amount of the insurance proceeds is taxable to Prime?

Reference no: EM132974156

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