Patty's Factory Building,which Has an Adjusted Basis of $475,000,is Destroyed

Essay

Patty's factory building,which has an adjusted basis of $475,000,is destroyed by fire on April 8,2015.Insurance proceeds of $500,000 are received on June 1,2015.She has a new factory building constructed for $490,000,which she occupies on October 1,2015.Assuming Patty's objective is to minimize the tax liability,calculate her recognized gain or loss and the basis of the new factory building.