Identify the relevant tax issues for Martha

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Problem - A warehouse owned by Martha and used in her business (i.e., to store inventory) is being condemned by the city to provide a right-of-way for a highway. The warehouse has appreciated by $180,000 based on Martha's estimate of its fair market value. In the negotiations, the city is offering $35,000 less than what Martha believes the property is worth.

Alan, a real estate broker, has offered to purchase Martha's property for $20,000 more than the city's offer. Martha plans to invest the proceeds she will receive in an office building she will lease to various tenants.

a. Identify the relevant tax issues for Martha.

b. Would the answer in part (a) change if Martha's warehouse was property being held for investment rather than being used in her business? Explain.

Reference no: EM132659731

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