David Price owned machinery which he had acquired in 2014 at a cost of $100,000. During 2015, the machinery was destroyed by fire. At that time it had an adjusted basis of $86,000. The insurance proceeds awarded to price amounted to $125,000, and he immediately acquired a similar machine for $110,000.
What should Price report as ordinary income resulting from the involuntary conversion for 2015?
a. $14,000
b. $15,000
c. $25,000
d. $39,000
Answer: A
Tax
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