A Fire Destroyed Equipment Used by BLP Inc

Multiple Choice

A fire destroyed equipment used by BLP Inc. in its manufacturing business. BLP's adjusted tax basis in the equipment was $24,000. Three weeks after the fire, BLP paid $40,000 for replacement equipment. Which of the following statements is false?

A) If the destroyed equipment was uninsured, BLP recognizes a $24,000 ordinary loss and takes a $40,000 basis in the new equipment.
B) If BLP received a $20,000 insurance reimbursement, it recognizes a $4,000 ordinary loss and takes a $40,000 basis in the new equipment.
C) If BLP received a $30,000 insurance reimbursement, it recognizes no gain and takes a $34,000 basis in the new equipment.
D) If BLP received a $42,500 insurance reimbursement, it recognizes no gain and takes a $24,000 basis in the new equipment.