Alma Is in the Business of Dairy Farming

question 49

Multiple Choice

Alma is in the business of dairy farming. During the year, one of her barns was completely destroyed by fire. The adjusted basis of the barn was $90,000. The fair market value of the barn before the fire was $75,000. The barn was insured for 95% of its fair market value, and Alma recovered this amount under the insurance policy. Alma has adjusted gross income for the year of $40,000 (before considering the casualty) . Determine the amount of loss she can deduct on her tax return for the current year.

• A) $3,750
• B) $14,650
• C) $14,750
• D) $18,750
• E) None of the above

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Definitions:

Social Brain Theory

The theory that human brain evolution and its size are primarily driven by social complexity and the demands of social interactions.

Collective Unconscious

A term coined by Carl Jung, which refers to structures of the unconscious mind shared among beings of the same species.

Human Brain

The central organ of the human nervous system, responsible for processing sensory information, regulating bodily functions, and enabling cognition and emotional responses.

Evolutionary Theory

A scientific explanation regarding the biological changes and speciation events that occur over generations, based on natural selection.