Question
Chapter 9: A hurricane completely destroyed equipment owned by Aggie Inc. The equipments adjusted tax basis was $80,000. The company collected $100,000 of insurance proceeds.
Chapter 9: A hurricane completely destroyed equipment owned by Aggie Inc. The equipments adjusted tax basis was $80,000. The company collected $100,000 of insurance proceeds. Aggie purchased identical equipment in the year after the disaster. The cost of the replacement property is $100,000. Compute Aggies recognized gain or loss on the involuntary conversion and its tax basis in the new equipment.
Group of answer choices
No recognized gain or loss; $80,000 basis
$20,000 recognized gain; $77,000 basis
No recognized gain or loss; $100,000 basis
None of the above
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