A painting that Tulip & Co. held for investment was destroyed in a flood. The COMMUNICATIONS painting was insured, and Tulip had a $60,000 gain from this casualty. It also had a $27,000 loss from an uninsured antique vase that was destroyed by the flood. The vase was also held for investment. Tulip had no other property transactions during the year and has no nonrecaptured § 1231 losses from prior years.
Compute Tulip’s net gain or loss and identify how it would be treated.
Write a letter to Tulip explaining the nature of the gain or loss. Tulip’s address is 2367 Meridian Road, Hannibal Point, MO 34901.