Monroe's delivery truck is damaged in an accident. Monroe's adjusted basis for the delivery truck prior to the accident is $20,000. If Monroe receives insurance proceeds of $21,000 and recognizes a casualty gain of $1,000, his adjusted basis for the delivery truck after the accident is $21,000.

Question

Quizplus · Accepted Answer

The adjusted basis of the delivery truck after the accident is not $21,000. The adjusted basis is reduced by the insurance proceeds received, and since Monroe recognizes a gain of $1,000, the adjusted basis would be $0 after the accident.

Monroe's Delivery Truck Is Damaged in an Accident