In June,a Fire Completely Destroyed Office Furniture Owned by W&S

Multiple Choice

In June,a fire completely destroyed office furniture owned by W&S Inc.W&S's adjusted tax basis in the furniture was $17,040.W&S received a $15,000 reimbursement from its property insurance company,and on August 8,it paid $16,000 to replace the furniture.Compute W&S's recognized gain on loss on the involuntary conversion and its tax basis in the new furniture.

A) No recognized gain or loss; $18,040 basis in the furniture
B) $2,040 recognized loss; $16,000 basis in the furniture
C) No recognized gain or loss; $13,960 basis in the furniture
D) None of the above