Sandra's Automobile, Which Is Used Exclusively in Her Trade or Business

question 214

Multiple Choice

Sandra's automobile, which is used exclusively in her trade or business, was damaged in an accident. The adjusted basis prior to the accident was $11,000. The fair market value before the accident was $10,000 and the fair market value after the accident is $6,000. Insurance proceeds of $3,200 are received. What is Sandra's adjusted basis for the automobile after the casualty?

• A) $0
• B) $7,000
• C) $7,800
• D) $10,200
• E) None of the above

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Definitions:

Controversial

Causing debate or disagreement, often due to differing opinions or values.

Oligopoly

A market structure in which a few firms dominate, often resulting in reduced competition.

Collude

When firms work together, often in secret, to fix prices, limit production, or divide markets, in order to increase profits by reducing competition.

Cartel

An alliance of producers who agree to control prices, production, and marketing of their products to maximize collective profits.