12. Which of the following statements is true as it relates to the completed contract method (CCM) of accounting for long-term contacts.

A. The general rule is that a contract that meets the definition of a long-term contract must be accounted for using the CCM of accounting.

B. Small contractors with an average annual gross receipts of less than $20 million for the three preceding years in which the contract is entered into may use the CCM

C. The gross contract price and all of the allocable costs are accounted for in the year the contract is completed.

D. All of the above are true.

E. None of the above are true.

13. VWMP Seafood is a calendar year taxpayer. In 2010, a hurricane destroyed three of VWMP's fishing boats with a $1,250,000 aggregate adjusted tax basis. On October 12, VWMP received a $3,500,000 reimbursement from its insurance company. On May 19, 2011, VWMP purchased new fishing boats for $4,250,000. Compute VWMP's realized gain or loss on the involuntary conversion and its tax basis in the new boats.

A. $0 realized gain; $1,250,000 basis in the boats. B. $2,250,000 realized gain; $4,250,000 basis in the boats. C. $1,250,000 realized gain; $1,250,000 basis in the boats. D. $2,250,000 realized gain; $2,000,000 basis in the boats.

E. None of these.

14. Macon, Inc. transferred an old asset with a $53,100 adjusted tax basis plus $5,000 cash in exchange for a new asset worth $75,000. Which of the following statements is false?

A. The old asset's FMV is $70,000. B. If the exchange is nontaxable, Macon's recognized gain is $5,000. C. If the exchange is nontaxable, Macon's tax basis in the new asset is $58,100. D. If the exchange is nontaxable, Macon identified the new asset within 45 days of selling the old asset.

E. None of the above are false.