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:

Tripling Output

The act of increasing the production or output of goods and services threefold, signifying significant growth or scaling up of operations.

Economies of Scale

Cost advantages companies experience when production becomes efficient, as the cost per unit of output decreases with increasing scale.

General Electric

A multinational conglomerate corporation operating in sectors like aviation, power, healthcare, and renewables, among others.