In the current year, Marcus reports the following casualty gains and losses on personal-use property. Assets X and Y are destroyed in the first casualty while Z is destroyed in a second casualty.
Asset Reduction in FMV Adjusted Basis Insurance Holding Period
X $8,000 $2,000 $7,000 2 years
Y 3,000 5,000 2,000 10 months
Z 2,500 1,300 1,000 8 months
As a result of these losses and insurance recoveries, Marcus must report
A) a net gain of $3,700.
B) a long-term gain of $4,900 on asset X; a short-term capital loss of $900 on asset Y; and a short-term capital loss of $200 on asset Z.
C) a long-term capital gain of $5,000 on asset X; a short-term capital loss of $900 on asset Y; and a short-term capital loss of $200 on asset Z.
D) a long-term capital gain of $5,000 on asset X; a short-term capital loss of $900 on asset Y; and a short-term capital loss of $300 on asset Z.