Which of the Following Is/are Correct Regarding the Deferral of Gain

question 80

Multiple Choice

Which of the following is/are correct regarding the deferral of gain attributable to the involuntary conversion of personal property (personalty) ?
I.Gain deferral is mandatory.
II.Replacement property must be acquired within one year of the close of the tax year in which gain is realized from an involuntary property damage conversion.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Net Income Before Taxes

The amount of profit a company has earned before any taxes have been deducted.

Equity for Common Stockholders

The portion of a company’s equity capital that is attributable to holders of common stock, representing their ownership interest.

Return on Total Assets

A financial ratio that measures the net income produced by total assets during a period by comparing net income to the average total assets, indicating how efficiently a company uses its assets to generate earnings.

Net Income Before Interest and Taxes

Earnings of a company before interest and tax expenses are deducted; also known as operating profit.