Nancy owned business equipment with a $16,950 adjusted basis and a $7,500 FMV that was destroyed by a tornado. The equipment was uninsured. As a result of this casualty, Nancy:
A. Recognizes a $7,500 Section 1231 loss
B. Is allowed to deduct a $7,500 ordinary loss
C. Is allowed to deduct a $16,950 ordinary loss
D. Recognizes a $16,950 Section 1231 loss
Answer: C
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