A Tornado Demolished Several Delivery Vans Owned for Three Years

A tornado demolished several delivery vans owned for three years by Wadham Company. Wadham's adjusted basis in the vans was $28,400, and Wadham paid $90,000 to purchase new vans. Wadham received a $25,000 settlement from its casualty insurance company. Consequently, Wadham recognizes:

A) $3,400 Section 1231 loss
B) $65,000 Section 1231 loss
C) $65,000 ordinary loss
D) None of these choices are correct