Red Company Had an Involuntary Conversion on December 23, 2019

question 60

Multiple Choice

Red Company had an involuntary conversion on December 23, 2019.The machinery had been acquired on April 1, 2017, for $49,000 and its adjusted basis was $14,200.The machinery was completely destroyed by fire and Red received $10,000 of insurance proceeds for the machine and did not replace it.This was Red's only casualty or theft event for the year.As a result of this event, Red initially has:

• A)$10,000 § 1231 loss.
• B)$10,000 § 1245 recapture gain.
• C)$4,200 casualty loss.
• D)$4,200 § 1231 loss.
• E)None of these.

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Definitions:

Emotion-Focused Coping

Coping strategies aimed at reducing or managing the emotional distress associated with a situation.

Facial Feedback Hypothesis

The idea that sensory feedback from our facial expressions can affect our mood and even change our emotional state.

Distress

A state of emotional, mental, or physical strain or suffering, often resulting from adverse or demanding circumstances.

Eustress

Positive or beneficial stress that motivates and focuses energy, often associated with fulfilling or enjoyable challenges.