Red Company Had an Involuntary Conversion on December 23,2015

question 81

Multiple Choice

Red Company had an involuntary conversion on December 23,2015.The machinery had been acquired on April 1,2013,for $49,000 and its adjusted basis was $14,200.The machinery was completely destroyed by fire and Red received $10,000 of insurance proceeds for the machine and did not replace it.This was Red's only casualty or theft event for the year.As a result of this event,Red initially has:

• A)$10,000 § 1231 loss.
• B)$10,000 § 1245 recapture gain.
• C)$4,200 casualty loss.
• D)$4,200 § 1231 loss.
• E)None of the above.

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Definitions:

Social Policies

Plans and actions undertaken by a government or institution to address social issues and improve the welfare of its citizens.

Criteria

Standards or principles by which something is judged or decided.

Poverty

A state where an individual or community lacks the financial resources and essentials for a minimum standard of living.

Two-Year Period

A span or duration of time lasting exactly 24 months or two calendar years.