Veronica, Inc.’s warehouse (with an adjusted tax basis of $75,000) was destroyed by fire. The following year, Veronica received insurance proceeds of $195,000 and acquired a new warehouse for $167,000. Veronica elected to recognize the minimum gain possible. What is Veronica’s basis in the new Warehouse?

Marshall purchased a computer for $1,500 and a stereo system for $1,300. The computer is used solely for business and the stereo solely for personal entertainment. During the same year, Marshall experienced serious financial difficulty and sold the stereo for $300 and the computer for $1,000. What amount, if any, is Marshall entitled to deduct as a loss relating to the sale of the stereo and computer?

Parallel Corporation’s building was destroyed as a result of a hurricane. The fair market value of the building at the time of the hurricane 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). Parallel does not defer any gain under the involuntary conversion provisions of Code Sec. 1033. What amount of the insurance proceeds is taxable to Parallel?

_______ would not be included in the calculation of realized gain or loss by a taxpayer on the transaction between one piece of real estate for another.

How should insurance deductibles and payouts be treated for proceeds on a warehouse destroyed by a fire?

A married couple abandoned their principal residence in March. They had purchased the home five years ago for $350,000. The home had a current FMV of $300,000. What is the maximum loss if any that they are allowed to deduct on the current year’s tax return for the abandoned property?