Joyce's Office Building Was Destroyed in a Fire (Adjusted Basis

question 221

Multiple Choice

Joyce's office building was destroyed in a fire (adjusted basis of $350,000? fair market value of $400,000) . Of the insurance proceeds of $360,000 she receives, Joyce uses $310,000 to purchase additional inventory and invests the remaining $50,000 in short-term certificates of deposit. She received only $360,000 because of a co-insurance clause in her insurance policy. What is Joyce's recognized gain or loss?

• A) $0
• B) $10,000 loss
• C) $10,000 gain
• D) $40,000 gain
• E) None of the above

---

Definitions:

Long-Term Memory

The capacity of the brain to store, retrieve, and maintain information over prolonged periods, extending from minutes to a lifetime.

Distortion

A change, twist, or exaggeration that alters the original shape, form, or sound of something, often leading to a misrepresentation of reality.

Decay

The process by which something deteriorates, breaks down, or loses its structure, quality, or value over time.

Life Expectancy

The average period that an individual is expected to live, based on statistical analysis of a given population’s health, and mortality.