Joyce's Office Building Was Destroyed in a Fire (Adjusted Basis

question 221

Multiple Choice

Joyce's office building was destroyed in a fire (adjusted basis of $350,000? fair market value of $400,000) . Of the insurance proceeds of $360,000 she receives, Joyce uses $310,000 to purchase additional inventory and invests the remaining $50,000 in short-term certificates of deposit. She received only $360,000 because of a co-insurance clause in her insurance policy. What is Joyce's recognized gain or loss?

• A) $0
• B) $10,000 loss
• C) $10,000 gain
• D) $40,000 gain
• E) None of the above

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Definitions:

Private Schools

Educational institutions that operate independently of the public school system and are funded through tuition payments and private sources.

Asylums

Historic institutions designed for the care and confinement of individuals with mental illness or disability, often criticized for their conditions and treatment of patients.

Prisons

Institutions designed to securely house individuals who have been convicted of crimes, as part of the criminal justice system.

Poorhouses

Institutions operated by local governments to house and provide for the poor, elderly, and infirm who had no means to support themselves.