Red Company had an involuntary conversion on December $23,2023.$ The machinery had been acquired on April $1,2021,$ 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$.$ $$10,0001231$ loss.

b$.$ $$4,200$ casualty loss.

c$.$ $$4,2001231$ loss. Wrong answer

d$.$ $$10,0001245$ recapture gain.