In March,a flood completely destroyed three delivery vans owned by Totle Inc.Totle's adjusted tax basis in the vans was $48,900.Totle received a $90,000 reimbursement from its property insurance company,and on September 8,it purchased one new delivery van for $70,000.Compute Totle's recognized gain on loss on the involuntary conversion and its tax basis in the new van.
A)No recognized gain or loss; $48,900 basis in the van
B)$20,000 recognized gain; $70,000 basis in the van
C)$20,000 recognized gain; $48,900 basis in the van
D)None of the above

Question

Quizplus · Accepted Answer

The Answer of In March,a flood completely destroyed three delivery vans owned by Totle Inc.Totle's adjusted tax basis in the vans was $48,900.Totle received a $90,000 reimbursement from its property insurance company,and on September 8,it purchased one new delivery van for $70,000.Compute Totle's recognized gain on loss on the involuntary conversion and its tax basis in the new van.
A)No recognized gain or loss; $48,900 basis in the van
B)$20,000 recognized gain; $70,000 basis in the van
C)$20,000 recognized gain; $48,900 basis in the van
D)None of the above

In March,a Flood Completely Destroyed Three Delivery Vans Owned by Totle