美国注册会计师考试真题-REG-29

CPA考试真题

2014 AICPA Newly Released Questions – Regulation

29. CPA-08459

Prime Corporation's building was destroyed by a tornado. The fair market value of the building at the time of the tornado was $400,000 and its adjusted basis was $350,000. The insurance proceeds totaled $500,000 as follows:

$400,000 for the building

$100,000 for lost profits during rebuilding

Prime does not defer any gain under the involuntary conversion provisions of Code Sec. 1033. What amount of the insurance proceeds is taxable to Prime?

a. $0

b. $50,000

c. $100,000

d. $150,000

AICPA Difficulty Rating: DIFFICULT

Question Title: AICPA Newly Released 2014

Lecture to be assigned to: R-3

Topic to be assigned to: C Corporations, Operations 1

Page reference (page # and outline point): R3-17, II. B. 2. g.

ANSWER:

Choice "d" is correct. The building had an adjusted basis of $350,000 and $400,000 proceeds were received for it. That results in a taxable gain of $50,000, because none of it was deferred. The $100,000 received for lost profits is taxable as well. The total taxable amount is $150,000 ($50,000 + $100,000).

Choice "a" is incorrect. $0 would be the taxable amount just on the building if the gain were deferred.

Choice "b" is incorrect. $50,000 is the taxable amount of the proceeds for the building only. Choice "c" is incorrect. $100,000 is the taxable amount of the proceeds for lost profits only.  29