Red Company had an involuntary conversion on December 23, 2021. The machinery had been acquired...
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Red Company had an involuntary conversion on December 23, 2021. The machinery had been acquired on April 1, 2019, for $49,000 and its adjusted basis was $14,200. The machinery was completely destroyed by fire and Red received $10,000 of insurance proceeds for the machine and did not replace it. This was Red's only casualty or theft event for the year. As a result of this event, Red initially has: a.$10,000 1231 loss. b.$4,200 1231 loss. c.$4,200 casualty loss. d.$10,000 1245 recapture gain.
Red Company had an involuntary conversion on December 23, 2021. The machinery had been acquired on April 1, 2019, for $49,000 and its adjusted basis was $14,200. The machinery was completely destroyed by fire and Red received $10,000 of insurance proceeds for the machine and did not replace it. This was Red's only casualty or theft event for the year. As a result of this event, Red initially has:
a.$10,000 1231 loss.
b.$4,200 1231 loss.
c.$4,200 casualty loss.
d.$10,000 1245 recapture gain.
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