Cassie Owns Equipment ($45,000 Basis and $30,000 FMV)and a Building

question 31

Multiple Choice

Cassie owns equipment ($45,000 basis and $30,000 FMV) and a building ($152,000 basis and $158,000 FMV) ,which are used in Cassie's business.Cassie has used straight-line depreciation for both assets,which were acquired two years ago.Both the equipment and the building are destroyed in a fire,and Cassie collects insurance proceeds equal to the assets' FMV.The tax result to Cassie for this transaction is a

• A)$15,000 Sec.1231 loss and a $6,000 ordinary gain.
• B)$15,000 ordinary loss and a $6,000 ordinary gain.
• C)$15,000 ordinary loss and a $6,000 Sec.1231 gain.
• D)$15,000 Sec.1231 loss and a $6,000 Sec.1231 gain.

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Definitions:

Non-professionals

refers to individuals who are not formally trained or certified in a particular professional field.

General Adaptation Syndrome

A theoretical model created by Hans Selye that describes the body's short-term and long-term reactions to stress, consisting of three stages: alarm, resistance, and exhaustion.

Physiological-based Solution

An approach to solving problems that relies on understanding and modifying the body's natural processes.

Alarm Reaction

The initial phase in the body’s response to stress, activating various physiological changes for fight or flight.