Charlotte's Apartment Building That Has an Adjusted Basis of $200,000

Multiple Choice

Charlotte's apartment building that has an adjusted basis of $200,000 is destroyed by fire. Early the following year, Charlotte receives a $425,000 insurance check and reinvests $400,000 of the proceeds in an apartment building. What is the basis in the new building?

A) $- 0 -
B) $425,000
C) $400,000
D) $200,000
E) $175,000