Question

Yancy's personal residence is condemned as part of an urban renewal project. His adjusted basis for the residence is $480,000.

He receives condemnation proceeds of $460,000 and invests the proceeds in stocks and bonds.

A) calculate yancy's realized and recognized gain or loss.

B) if the condemnation proceeds are $505,000, what are yancy's realized and recognized gain or loss?

C) what are yancy's realized and recognized gain or loss in (a) if the house was rental property?

Answer 1

a.Realised Loss of Yanci's Personal Residence is $20,000 . Recognised Loss is Zero

b. Recognised Gain= $25.000

c. the realised gain will be $460.000

Step-by-step explanation:

A. Realised Gain= Condemnation Proceeds-Adjsuted basis

= $460000-$480000

($20000)

Realised Loss of Yanci's Personal Residence is $20,000 . Recognised Loss is Zero

B. Realised Gain in case Condemnation proceeds are $505.000

Realised Gain= $505.000-$480.000

=$25,000

Recognised Gain= $25.000

C. If the House is rental property then the realised gain will be $460.000