Nancy Owned Business Equipment with a $16,950 Adjusted Basis and a $7,500

Multiple Choice

Nancy owned business equipment with a $16,950 adjusted basis and a $7,500 FMV that was destroyed by a tornado. The equipment was uninsured. As a result of this casualty, Nancy:

A) Recognizes a $7,500 Section 1231 loss
B) Recognizes a $16,950 Section 1231 loss
C) Is allowed to deduct a $16,950 ordinary loss
D) Is allowed to deduct a $7,500 ordinary loss