A Factory Building Owned by Amber, Inc

Multiple Choice

A factory building owned by Amber, Inc. is destroyed by a hurricane. The adjusted basis of the building was $400,000 and the appraised value was $425,000. Amber receives insurance proceeds of $390,000. A factory building is constructed during the nine-month period after the hurricane at a cost of $450,000. What is the recognized gain or loss and what is the basis of the new factory building?

A) $0 and $450,000.
B) $0 and $460,000.
C) ($10,000) and $440,000.
D) ($10,000) and $450,000.
E) None of the above.