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  3. 1. betty owns a horse farm with 500 acres of land

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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