Gem Company's Manufacturing Facility Was Destroyed by a Flood

Multiple Choice

Gem Company's manufacturing facility was destroyed by a flood. The facility's adjusted basis was $665,000, and Gem received an $850,000 insurance reimbursement. Within 18 months of the flood, Gem rebuilt the facility at a total cost of $975,000. Which is Gem's basis in the new facility?

A) $790,000
B) $850,000
C) $1,160,000
D) $665,000