Billy Bob, Who Is Single, Owns a Mountain Estate in North

Essay

Billy Bob, who is single, owns a mountain estate in North Carolina with a basis of $900,000 that he used as his principal residence for the previous five years. On December 6, 2018 a major earthquake hit the area and the home was completely destroyed. Billy Bob received $1,450,000 from his insurance to rebuild or replace the home. Billy Bob decides to build a home in Charlotte near his brother. How much gain must he recognize if he (a) invests only $1,100,000 in the new home? (b) invests only $800,000 in the new home?