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

question 138

Multiple Choice

Emma owns a small building ($120,000 basis and $123,000 FMV) and equipment ($35,000 basis and $22,000 FMV) . Both assets were acquired three years ago, are used in Emma's business, and are depreciated using straight- line depreciation. 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) $3,000 LTCG; $3,000 LTCL; and $13,000 ordinary loss.
• B) $10,000 net ordinary loss and a $3,000 NLTCL.
• C) $13,000 NLTCL.
• D) $13,000 ordinary loss.

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Definitions:

Sum of Squares

A statistical measure that quantifies the variance within a dataset by summing the squared differences between each value and the mean.

Forecast Accuracy

The degree to which forecasted values correspond with actual values over a specified period.

Mean Absolute Deviation

Mean absolute deviation measures the average absolute distances between each data point in a set and the set's mean, providing an overview of variability.

Sum of Squares

A statistical technique used to describe the total variation in a dataset, which is the sum of the squared differences from the mean.