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:

Tolerance

The amount of variation from a standard value that is permissible.

Impedance

The total opposition a circuit presents to the flow of alternating current, combining both resistance and reactance.

Low-pass Filters

Electronic circuits that pass signals with a frequency lower than a certain cutoff frequency and attenuate signals with frequencies higher than the cutoff frequency.

Inductor

A passive electrical component used in circuits to store energy in a magnetic field when electric current flows through it.