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