Calculate sarahs basis in the new farm building

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Reference no: EM131974071

Problem

Sarah's farm building, which was used in her business, was destroyed in a fire. Sarah's adjusted basis in the farm building was $75,000, and the FMV was $160,000. Sarah filed an insurance claim and was reimbursed $150,000. In that same year, Sarah invested $145,000 of the insurance proceeds in another farm building. Assuming the proper election is made to defer gain, calculate Sarah's basis in the new farm building.

Reference no: EM131974071

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