An office building with an adjusted basis of $320,000 was destroyed by fire on december 30, 2013. on january 11, 2014, the insurance company paid the owner $450,000. the fair market value of the building was $500,000, but under the co-insurance clause, the insurance company is responsible for only 90 percent of the loss. the owner reinvested $410,000 in a new office building on july 12, 2015, that was smaller than the original office building. the owner is a calendar year taxpayer.

i) what is the taxpayer’s recognized gain or loss?
ii) what is the taxpayer’s basis for the new office building?
iii) what is the latest date that the owner can reinvest the proceeds and qualify for deferral treatment?

Rate of return douglas keel, a financial analyst for orange industries, wishes to estimate the rate of return for two similar-risk investments, x and y. douglas's research indicates that the immediate past returns will serve as reasonable estimates of future returns. a year earlier, investment x had a market value of $27 comma 000; and investment y had a market value of $46 comma 000. during the year, investment x generated cash flow of $2 comma 025 and investment y generated cash flow of $ 6 comma 770. the current market values of investments x and y are $28 comma 582 and $46 comma 000, respectively. a. calculate the expected rate of return on investments x and y using the most recent year's data. b. assuming that the two investments are equally risky, which one should douglas recommend? why?