Which of the following situations would not be permitted to defer the recognition of any recapture that might arise from the disposition of an asset?
A)A customized half-ton truck that belonged to a construction company was sold in 20x0. The proceeds from the sale generated recapture. A new customized truck was purchased fourteen months later in order to carry out the duties of a large contract
Awarded to the company.
B)A building that was used for income earning purposes was sold in December 20x0. The proceeds from the sale generated recapture. A new building was purchased in April 20x1. The company's fiscal year-end is December 31st.
C)A half-ton truck that belonged to a construction company was stolen in 20x0. Insurance proceeds were received which generated recapture. The truck was replaced in 20x1.
D)A building that was used for income earning purposes was destroyed in a fire. Insurance proceeds were received which generated recapture. A new building was built one and a half years later.

Question

Quizplus · Accepted Answer

Recapture deferral typically requires replacement within a specific time frame, often within the same fiscal year or shortly thereafter. In option A, the new truck was purchased fourteen months later, which may exceed the allowable deferral period.

Which of the Following Situations Would Not Be Permitted to Defer