A Warehouse Used by Dirk Dumont in His Business Was

Multiple Choice

A warehouse used by Dirk Dumont in his business was condemned by the state. fte fair market value of the warehouse was $300,000; however, the state only awarded Dirk $250,000. Dirk's adjusted basis in the warehouse was $100,000. Dirk spent $75,000 to renovate an old barn that he owned in order to convert it to a warehouse, and he also purchased a new warehouse for $125,000. Both warehouses will be used to house the equipment previously held in the state condemned warehouse. What amount should Dirk report as gain or loss on the condemnation if an election is made under Code Sec. 1033?

A) ($100,000)
B) ($50,000)
C) $0
D) $50,000
E) $100,000