1. Betty owns a horse farm with 500 acres of land (adjusted basis of $600,000)....
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Accounting
1. Betty owns a horse farm with 500 acres of land (adjusted basis of $600,000). Fifty acres of the land are condemned by the state for $400,000 in order to build a municipal stadium. Since the fair market value of Bettys farm is significantly decreased due to the proximity to the future stadium, the state also awards Betty $300,000 in severance damages. Betty does not use the $300,000 to restore the usefulness of the farm and all of the $700,000 ($300,000+$400,000) proceeds are invested in the stock market. What is Bettys recognized gain or (loss) associated with the receipt of $700,000?
a. $0
b. $100,000
c. $300,000
d. $340,000
e. $640,000
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