Rachel’s office building, which has an adjusted basis of $225,000, is destroyed by fire on March 5, 2015. Insurance proceeds of $375,000 are received on July 1, 2015. She has a new office building constructed for $350,000, which she occupies on December 1, 2015. Assuming Rachel’s objective is to minimize the tax liability, calculate her recognized gain or loss and the basis of the new office building.Show your work and explain why you think Congress created the rules to create the result you reached.