During the current year, Mrs. Brown paid $15,000 for the demolition of a warehouse she...
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Accounting
During the current year, Mrs. Brown paid $15,000 for the demolition of a warehouse she was using in her business. At the time of the destruction, Mrs. Brown had an adjusted basis in the warehouse of $25,000 and a basis of $12,000 in the land where the warehouse stood. How should Mrs. Brown treat the cost of demolishing the warehouse for federal income tax purposes?
A. $15,000 business expense; $25,000 recognized loss.
B. $15,000 business expense; $25,000 addition to basis of land.
C. $40,000 business expense.
D. $40,000 addition to basis of land.
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