Problem 13-83 (LO. 7, 9)
Wanda, a calendar year taxpayer, owned a building (adjusted basis of $250,000) in which she operated a bakery that was destroyed by fire in December 2024. She receives insurance proceeds of $290,000 for the building the following March. Wanda is considering two options regarding the investment of the insurance proceeds. First, she could purchase a local building (suitable for a bakery) that is for sale for $275,000. Second, she could buy a new home for $290,000 and go back to college and finish her degree.
a. To minimize her tax liability, which of these alternatives should Wanda choose?
Option 1 results in a recognized gain of $ and Option 2 results in a recognized gain of $ . Therefore, Wanda should select .
b. What is the latest date on which Wanda can replace the involuntarily converted property to qualify for § 1033?
c. What is the latest date on which Wanda can replace the involuntarily converted property to qualify for § 1033 if the involuntary conversion is a condemnation?