Riley Operates a Plumbing Business, and This Year the Three-Year-Old

question 45

Multiple Choice

Riley operates a plumbing business, and this year the three-year-old van he used in the business was destroyed in a traffic accident. The van was originally purchased for $20,000 and the adjusted basis was $5,800 at the time of the accident. Although the van was worth $6,000 at the time of accident, insurance only paid Riley $1,200 for the loss. What is the amount of Riley's casualty loss deduction?

• A)$6,000
• B)$14,000
• C)$5,800
• D)$4,600
• E)$5,300

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Definitions:

Artificial Laughter

Laughter that is produced by artificial means, often sounding forced or unnatural compared to genuine laughter.

Perceptual Set

A psychological framework that influences how a person perceives and interprets sensory information based on expectations, biases, and experiences.

Mental Predisposition

An inclination or tendency to think in a particular way, often beforehand or without complete information.

Unchanging Stimulus

A stimulus that remains constant and does not vary over time, often used in experiments to test sensory thresholds or responses.