A fire destroyed Jimmy's Teeshirt Shop. The business had an adjusted basis of $500,000 and a fair market value of $600,000 before the fire. Jimmy received $550,000 from the insurance company and opened a new Teeshirt Shop with the proceeds. Jimmy has a realized gain of $50,000. 1. Jimmy has a recognized gain of $50,000. Oa, Only statement I is correct. Ob. Only statement II is correct. Oc. Both statements are correct. Od. None of these statements are correct.

A fire destroyed Jimmy's Teeshirt Shop. The business had an adjusted basis of $500,000 and a fair market value of $600,000 before the fire. Jimmy received $550,000 from the insurance company and opened a new Teeshirt Shop with the proceeds. Jimmy has a realized gain of $50,000. 1. Jimmy has a recognized gain of $50,000. Oa, Only statement I is correct. Ob. Only statement II is correct. Oc. Both statements are correct. Od. None of these statements are correct.

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter15: Property Transactions: Nontaxable Exchanges

Section: Chapter Questions

Problem 3BCRQ

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