Question: Issue Recognition Problems Identify the tax issue or issues suggested

Issue Recognition Problems Identify the tax issue or issues suggested by the following situations, and state each issue in the form of a question.
In 2014, transportation equipment owned by Corporation ABC was stolen. The adjusted basis in the equipment was $105,000, and ABC received a $400,000 insurance reimbursement. It immediately paid $440,000 for replacement transportation equipment. On its 2014 tax return, ABC elected to defer the $295,000 gain realized on the involuntary conversion. In 2015, ABC generated a $7 million net operating loss—the first in its history. ABC’s aggregate taxable income on its 2013 and 2014 returns was $3.2 million.

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  • CreatedNovember 03, 2015
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