A barn held more than one year and used in a business is destroyed in a tornado.

Question

A barn held more than one year and used in a business is destroyed in a tornado. The barn originally cost $356,000 and was fully depreciated using straight-line depreciation. The barn was insured for its $543,000 replacement cost minus a deductible of $1,000. Which of the statements below is correct concerning these facts?

a. the barn was a long-term personal use asset.

b. there is a casualty loss from disposition of the barn.

c. the recognized gain from disposition of the barn is $186,000.

d. the recognized gain from disposition of the barn is subject to special netting rules. e. c. and d.

Explanation / Answer

the barm was a long term personal use asset. is the correct option

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