A Barn Held More Than One Year and Used in a Business

Multiple Choice

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.