Question: Beta Corp. had an involuntary conversion on December 31, 2023. It's equipment had been acquired on May 1, 2021 for $98,000 and its adjusted basis

Beta Corp. had an involuntary conversion on December 31, 2023.  It's equipment had been acquired on May 1, 2021 for $98,000 and its adjusted basis was $28,400.  The equipment was completely destroyed by fire and Beta received $20,000 of insurance proceeds for the machine and did not replace it.  This was Beta's only casualty and theft event for the year.  As a result of this event, Beta initially has:

 

 a.

$20,000 Sec. 1245 recapture gain. 

 

 b.

None of the choices presented are correct.  

 

 c.

$8,400 Sec. 1231 loss.

 

 d.

$8,400 casualty loss.  

 

 e.

$20,000 Sec. 1231 loss.

 

 

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