Alma Is in the Business of Dairy Farming

question 49

Multiple Choice

Alma is in the business of dairy farming. During the year, one of her barns was completely destroyed by fire. The adjusted basis of the barn was $90,000. The fair market value of the barn before the fire was $75,000. The barn was insured for 95% of its fair market value, and Alma recovered this amount under the insurance policy. Alma has adjusted gross income for the year of $40,000 (before considering the casualty) . Determine the amount of loss she can deduct on her tax return for the current year.

• A) $3,750
• B) $14,650
• C) $14,750
• D) $18,750
• E) None of the above

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Definitions:

Physical Health

Refers to the well-being of the body and the proper functioning of the organism of an individual, often associated with a healthy lifestyle and absence of disease.

Embryonic Period

The period from 2 to 8 weeks after fertilization, during which the major organs and structures of the organism develop.

Zygote

Cell resulting from the uniting of the ovum and sperm.

Umbilical Cord

The flexible cordlike structure connecting a fetus to the placenta, delivering nutrients and oxygen and removing waste.