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.Both casualties were the result of federal disasters.AssetReduction in FMVAdjusted BasisInsuranceHolding PeriodX$8,000$2,000$7,0002 yearsY3,0005,0002,00010 monthsZ2,5001,3001,0008 monthsAs a result of these losses and insurance recoveries, Marcus must report
A. 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.
B. 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.
C. a net gain of $3,700.
D. 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.
Answer: B
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