A burglar broke into Mr. and Mrs. Vale’s home and stole an oil painting purchased 15 years ago for $89,000. This theft was their only property loss, and their AGI was $125,000. Compute the couple’s recognized gain or deductible loss under each of the following circumstances:
a. The painting was insured for $200,000, which the Vales used to purchase another painting by the same artist. (See the discussion of involuntary conversions in Chapter 9.) b. The painting was insured for $200,000, which the Vales used to purchase market-able securities.
c. The painting was insured for $50,000, which the Vales used to purchase marketable securities.
d. The painting was uninsured.