Ed Owns a Racehorse with a $600,000 Basis Used for Breeding

question 35

Multiple Choice

Ed owns a racehorse with a $600,000 basis used for breeding purposes.The racehorse is killed in a tornado,and Ed collects $1,000,000 from the insurance company.He purchases another horse for $550,000.What is the amount of gain recognized on the transaction?

• A)$0
• B)$50,000
• C)$350,000
• D)$400,000

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Definitions:

Volume

A measurement of the amount of space an object or substance occupies, often measured in liters, cubic meters, or gallons.

Mass

An evaluation of how much material an object holds, commonly measured in kilograms or grams.

Chemical Sample

A chemical sample refers to a small, specifiable amount of substance or material taken for analysis, testing, or study to understand its composition or properties.

Density

A measure of mass per unit volume of a substance or object.