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:

Antidepressant Medication

Drugs designed to improve symptoms of depressive disorders by altering chemical levels in the brain, particularly serotonin and norepinephrine.

Dopamine

A neurotransmitter that affects the ability to perceive pleasure, voluntary movement, and learning and memory; it is involved in Parkinson’s disease and appears to play a role in schizophrenia.

Norepinephrine

A neurotransmitter whose action is similar to that of the hormone epinephrine and that may play a role in depression.

Successive Approximations

In operant conditioning, a series of behaviors that gradually become more similar to a target behavior.