Taxpayer's baseball academy had one of their pitching machines fully destroyed when a tornado passed by their training facility. Prior to the tornado, the machine had a Fair Market value of $20,000 and an adjusted basis of $16,000. Taxpayer received $20,000 of insurance proceeds to cover the loss and then purchased a replacement machine for $19,000.
Is this statement true regarding the gain or loss from this scenario?
Taxpayer's adjusted basis in the new machine is $19,000.