A Flood Destroyed a Business Asset Owned by Boochi Company

question 30

True/False

A flood destroyed a business asset owned by Boochi Company. Boochi's adjusted tax basis in the asset was $87,100. Six months after the flood, Boochi used its $100,000 insurance settlement to replace the asset. Boochi can recognize a $12,900 gain or it can elect to defer gain recognition.

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Definitions:

2% Commission

A fee paid to a salesperson, broker, or agent, equivalent to 2% of the sales amount or transaction value.

Closing Price

The final price at which a security is traded on a given trading day, representing the most up-to-date valuation of the security until trading resumes.

Trading Day

Refers to a day on which the stock exchanges are open for trading.

Broker Fee

A charge or commission a broker commands for their service in facilitating transactions, such as buying or selling securities.