Richard's business is condemned by the state on July 10,2017,as part of a plan to add a highway loop around the city.His adjusted basis in his business is $500,000.He receives condemnation proceeds of $610,000 on August 30,2017.He purchases another business for $575,000 on September 15,2017.
a.What is Richard's realized and recognized gain or loss?
b.What is Richard's basis in the new business?

Condemnation Proceeds

Financial compensation received when property is taken by a government authority through eminent domain.

Recognized Gain

The amount of profit that is realized from the sale of assets that must be reported for tax purposes.

Adjusted Basis

The original cost of a property adjusted for factors such as depreciation or improvements, used to calculate capital gains or losses for tax purposes.