Mr. and Mrs. Small own and live in a house, with an adjusted basis of $ 390 comma 000, that was purchased in 1998. The house is destroyed by a tornado on August 10 of the current year, and the Smalls receive insurance proceeds of $ 420 comma 000. They purchase another residence for $ 500 comma 000 four months later. Read the requirements.LOADING... Question content area bottom Part 1 a. May they exclude the $ 30 comma 000 gain, and if so, what is the basis of the residence purchased in December? A. Yes, they may exclude the gain under Sec. 1033. B. Yes, they may exclude the gain under Sec. 1031. C. No, they may not exclude the gain. D. Yes, they may exclude the gain under Sec. 121. Part 2 The basis of the residence purchased in December is Part 3 b. May they defer the $ 30 comma 000 gain, and if so, what is the basis of the residence purchased in December? A. No, they may not defer the gain. The Smalls cannot exclude the gain under Sec. 121. B. Yes, they may defer the gain under Sec. 1031 as an involuntary conversion. The Smalls