Which of the Following Qualify as Replacement Property Under the Involuntary

question 73

Multiple Choice

Which of the following qualify as replacement property under the involuntary conversion rules?
I.Mayfield Ice Cream Company's production plant is destroyed by a hurricane. The insurance proceeds are used to replace the plant with a refrigerated storage container.
II.Mayfield Ice Cream Company's production plant is destroyed by a fire. They sign a five year lease for a replacement production facility, and the insurance proceeds are then used to buy an office building
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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:

Vicarious Liability

Vicarious Liability is a legal principle that holds one party responsible for the actions of another party, under certain conditions, such as an employer being liable for the actions of an employee.

Truck Driver

A professional operator of a truck or large vehicle, responsible for transporting goods and materials from one location to another.

Nonprofit Corporation

An organization formed for purposes other than generating a profit, where none of its income is distributed to its directors or officers.

Ultra Vires

Acts or decisions made by an entity that are beyond the powers conferred by its constitution, charter, or laws.