Real Property Where Paul Peterson's Warehouse Is Located Is Completely

Multiple Choice

Real property where Paul Peterson's warehouse is located is completely destroyed by fire on November 23, 2012. Paul purchased the warehouse in 2006 for $800,000; its adjusted basis in the warehouse is $420,000. He receives $1 million from the insurance company on March 5, 2013. What amount must Paul reinvest in qualified replacement property and be able to defer the entire $580,000 realized gain from the condemnation?

A) $420,000.
B) $520,000.
C) $800,000.
D) $1,000,000.