Blitza Inc

question 50

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) Statements a. and c. are true.

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Definitions:

Full Lock

A term referring to the maximum engagement or locking position of a mechanical component, such as in steering systems where wheels are turned to their extreme limit.

Front Bumper

The front-most part of a vehicle designed to absorb impact in the event of a collision, protecting the vehicle and its occupants.

Positive Caster

Alignment setting of the wheels where the steering axis tilts toward the driver, improving vehicle stability and steering effort at high speeds.

Caster Shim

A shim used in the caster of a wheel assembly to adjust the angle of the wheel pivot, affecting steering and stability.