In March, a Flood Completely Destroyed Three Delivery Vans Owned

Multiple Choice

In March, a flood completely destroyed three delivery vans owned by Totle Inc. Totle's adjusted tax basis in the vans was $48,900. Totle received a $90,000 reimbursement from its property insurance company, and on September 8, it purchased one new delivery van for $70,000. Compute Totle's recognized gain on loss on the involuntary conversion and its tax basis in the new van.

A) No recognized gain or loss; $48,900 basis in the van
B) $20,000 recognized gain; $70,000 basis in the van
C) $20,000 recognized gain; $48,900 basis in the van
D) None of these choices are correct