Mavis Is a Schoolteacher with an Annual Salary of $28,000

Essay

Mavis is a schoolteacher with an annual salary of $28,000. Last year she sold a substantial block of securities that she had inherited from her grandmother several years before. She used the proceeds to buy an apartment building in a neighboring community. She realized a $15,000 capital loss on the sale. She carries over $12,000 of the capital loss to the current year. During the current year, a fire destroys the apartment building when its adjusted basis is $100,000. Mavis receives an insurance check for $110,000 and immediately invests it in another apartment building. Advise Mavis how she should deal with these situations for the current tax year.