Elaine owns equipment ($23,000 basis and $15,000 FMV) and a…
Elaine owns equipment ($23,000 basis and $15,000 FMV) and a building ($136,000 basis and $148,000 FMV), which are used in her business. Both were acquired several years ago. The equipment and the building are destroyed in a fire, and Elaine collects insurance proceeds equal to the assets’ FMV. a.What is the tax treatment of these two transactions?b.Assume that Elaine is only able to collect $3,000 from the insurance company for the equipment loss. What is the tax treatment of the two transactions (assume the basis and insurance reimbursement remain the same for the building).