Multi Inc., a company with a December 31 taxation year end, carries on business out of a single Class 1 building that cost $815,000

Multi Inc., a company with a December 31 taxation year end, carries on business out of a single Class 1 building that cost $815,000. At the beginning of 2022, the UCC balance for the class was $648,275. On June 30, 2022, a tornado destroyed the building. The building was insured for its FMV of $1,000,000 and the insurance company paid that amount in September 2022. Multi Inc. replaced the building in 2023 with a used building, at a cost of $1,075,000. Multi Inc. wanted to minimize income tax to the extent possible.

Describe the 2022 and 2023 income tax consequences of these events, including the capital cost and UCC balance for the replacement building at the end of 2023. Ignore any gain or loss related to the land on which the building was situated.

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