Blitza Inc

question 102

Multiple Choice

Blitza Inc. owned real property used for 12 years in its business that was subject to a $294,500 nonrecourse mortgage. Blitza failed to make timely mortgage payments, so the creditor foreclosed. At date of foreclosure, Blitza's basis in the property was $300,000, and the property's appraised FMV was $260,000. Which of the following statements is true?

• A) Blitza has no legal obligation to settle the $34,500 unpaid balance of the mortgage.
• B) Blitza recognizes a $40,000 Section 1231 loss.
• C) Blitza recognizes a $5,500 Section 1231 loss.
• D) Both Blitza has no legal obligation to settle the $34,500 unpaid balance of the mortgage and Blitza recognizes a $5,500 Section 1231 loss is true.

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Definitions:

Rounded Corner

A corner of an object or element that has been smoothed or curved, typically to reduce stress concentrations or for aesthetic purposes.

Arc

A smooth curve that often represents a part of the circumference of a circle.

Radius

The distance from the center of a circle to its perimeter.

Point Of Tangency

The exact point where a curve or surface touches another curve or surface without intersecting it, commonly used in geometry and drafting.