Emma Owns a Small Building ($120,000 Basis and $123,000 FMV)and

question 67

Multiple Choice

Emma owns a small building ($120,000 basis and $123,000 FMV) and equipment ($35,000 adjusted basis and $22,000 FMV) .Both assets were acquired three years ago and are used in Emma's business.Both are destroyed by fire.Insurance proceeds were equal to their FMVs.Only one other transfer of an asset occurs during the year,and a $3,000 LTCL is recognized.After considering all transactions,the tax result to Emma is a

• A)$13,000 NLTCL.
• B)$13,000 ordinary loss.
• C)$3,000 LTCG; $3,000 LTCL; and $13,000 ordinary loss.
• D)$10,000 net ordinary loss and a $3,000 NLTCL.