Red Company Had an Involuntary Conversion on December 23, 2014

question 136

Multiple Choice

Red Company had an involuntary conversion on December 23, 2014. The machinery had been acquired on April 1, 2012, for $49,000 and its adjusted basis was $14,200. The machinery was completely destroyed by fire and Red received $10,000 of insurance proceeds for the machine and did not replace it. This was Red's only casualty or theft event for the year. As a result of this event, Red initially has:

• A) $10,000 § 1231 loss.
• B) $4,200 casualty loss.
• C) $4,200 § 1231 loss.
• D) $10,000 § 1245 recapture gain.
• E) None of the above.

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Definitions:

Employee Morale

The overall satisfaction, outlook, and feelings of well-being that an employee has within their workplace environment.

Counselling

Counselling is a professional practice involving guidance and support provided by a trained individual to help people resolve personal, social, or psychological challenges and improve their well-being.

Clinical Psychology

A branch of psychology focused on diagnosing and treating mental illness, emotional disturbances, and dysfunctional behavior.

Counselling Psychology

A branch of psychology that focuses on providing therapeutic treatments to clients who experience a wide range of mental health issues and life stresses.