Question

Frank's investment property was condemned. his adjusted basis in the property was $145,000. he received a net condemnation award of $190,000 and purchased replacement property for $275,000. what is the amount of gain realized on the condemnation?

a. $0
b. $45,000
c. $85,000
d. $130,000

Answer 1

The gain realized on the condemnation of Frank's investment property is the difference between the net condemnation award and his adjusted basis, which is $45,000, corresponding to option B.

Step-by-step explanation:

The question revolves around calculating the gain realized on the condemnation of an investment property. Frank's adjusted basis in the property is $145,000, and he received a net condemnation award of $190,000. To calculate the gain, we subtract the adjusted basis from the condemnation award.

The calculation would be $190,000 (condemnation award) - $145,000 (adjusted basis), which gives us a gain of $45,000. Therefore, the correct option for the amount of gain realized on the condemnation is option B. It is important to note that purchasing the replacement property for $275,000 does not affect the realized gain calculation for the condemned property.