On November 18, 2014, equipment is stolen from ABC manufacturing. ABC purchased the equipment for $100,000 and its adjusted basis is $0. The insurance company paid ABC $20,000 for its loss on January 6, 2015. How long does ABC have to purchase qualified replacement property and how much must it reinvest to avoid recognizing its gain?
1) December 31, 2017 and $20,000, respectively.
2) December 31, 2015 and $20,000, respectively.
3) December 31, 2016 and $100,000, respectively.
4) December 31, 2015 and $100,000, respectively.
5) None of the above.