Question

Cassie owns equipment ($45,000 basis and $30,000 FMV) and a building ($152,000 basis and 5)$158,000 FMV), which are used in Cassie's business. Both assets were acquired two years ago. Theequipment and the building are destroyed in a fire, and Cassie collects insurance proceeds equal tothe assets' FMV. The tax result to Cassie for this transaction is a

Answer 1

Ordinary loss $15,000

Ordinary gain $6,000

Step-by-step explanation:

Ordinary loss = $45,000-$30,000

= $15,000

Ordinary gain =$158,000-$152,000

= $6,000

Therefore the tax result to Cassie for this transaction is Ordinary loss of $15,000 and Ordinary gain of $6,000.