Sandra's Automobile, Which Is Used Exclusively in Her Trade or Business

question 214

Multiple Choice

Sandra's automobile, which is used exclusively in her trade or business, was damaged in an accident. The adjusted basis prior to the accident was $11,000. The fair market value before the accident was $10,000 and the fair market value after the accident is $6,000. Insurance proceeds of $3,200 are received. What is Sandra's adjusted basis for the automobile after the casualty?

• A) $0
• B) $7,000
• C) $7,800
• D) $10,200
• E) None of the above

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Definitions:

Pegmatite

An igneous rock with extremely large crystals, formed by the slow cooling of magma, often containing rare minerals.

Texture

The general physical appearance or character of a rock, especially the size, shape, and arrangement of minerals and other materials.

Viscosity

A measure of a material’s resistance to flow.

Silicate Content

The proportion of silicate minerals present in a rock, soil, or other material.