Grantly Seafood Is a Calendar Year Taxpayer

Multiple Choice

Grantly Seafood is a calendar year taxpayer.In 2017,a hurricane destroyed three of Grantly's fishing boats with a $784,500 aggregate adjusted tax basis.On October 12,2017,Grantly received a $1 million reimbursement from its insurance company.On May 19,2018,Grantly purchased a new fishing boat for $750,000.Compute Grantly's recognized gain or loss on the involuntary conversion and its tax basis in the new boat.

A) $215,500 recognized gain; $750,000 basis in the boat
B) $250,000 recognized gain; $750,000 basis in the boat
C) $250,000 recognized gain; $784,500 basis in the boat
D) None of the above