Which of the Following Situations Would Not Be Permitted to Defer

question 6

Multiple Choice

Which of the following situations would not be permitted to defer the recognition of any recapture that might arise from the disposition of an asset?

• A) A building that was used for income earning purposes was destroyed in a fire. Insurance proceeds were received which generated recapture. A new building was built one and a half years later.
• B) A half-ton truck that belonged to a construction company was stolen in 20x0. Insurance proceeds were received which generated recapture. The truck was replaced in 20x1.
• C) A customized half-ton truck that belonged to a construction company was sold in 20x0. The proceeds from the sale generated recapture. A new customized truck was purchased fourteen months later in order to carry out the duties of a large contract awarded to the company.
• D) A building that was used for income earning purposes was sold in December 20x0. The proceeds from the sale generated recapture. A new building was purchased in April 20x1. The company's fiscal year-end is December 31^st.

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Definitions:

Innate Capacity

An inherent ability or potential present from birth, not developed through experience.

Psychosexual Stage

A concept in Freudian psychoanalysis that describes five stages of development (oral, anal, phallic, latency, and genital) through which a child's personality and sexual behavior mature.

Fixation

An obsessive interest or feeling towards a person, idea, or object, often leading to persistent focus on the subject.

Psychosexual Stage

A concept in Freudian psychoanalysis referring to five stages of childhood development, each characterized by the erogenous zone that is the source of a child's psychosexual energy.