Jerry sprayed ury Losses: with a pesticide in June 2021. Shortly thereafter, all of the trees and shrubs unaccountably died. The FMV and the adjusted basis of the plants were $15,000. Later that year, the pesti- cide manufacturer announced a recall of the particular batch of pesticide that Jerry used. It also announced a program whereby consumers would be repaid for any damage caused by the improper mixture. Jerry is single and reports $38,000 AGI in 2021 and $42,000 in 2022. a. Assume that in 2021 Jerry files a claim for his losses and receives notification that pay- ment of $15,000 will be received in 2022. Jerry receives full payment for the damage in 2022. How should the loss and the reimbursement be reported? b. How will your answer to Part a change if in 2022 the manufacturer files for bank- ruptcy and Jerry receives $1,500 in total and final payment for his claim? c. How will your answer to Part a change if the announcement and the reimbursement do not occur until late in 2022, after Jerry has already filed his tax return for 2021?

Jerry sprayed ury Losses: with a pesticide in June 2021. Shortly thereafter, all of the trees and shrubs unaccountably died. The FMV and the adjusted basis of the plants were $15,000. Later that year, the pesti- cide manufacturer announced a recall of the particular batch of pesticide that Jerry used. It also announced a program whereby consumers would be repaid for any damage caused by the improper mixture. Jerry is single and reports $38,000 AGI in 2021 and $42,000 in 2022. a. Assume that in 2021 Jerry files a claim for his losses and receives notification that pay- ment of $15,000 will be received in 2022. Jerry receives full payment for the damage in 2022. How should the loss and the reimbursement be reported? b. How will your answer to Part a change if in 2022 the manufacturer files for bank- ruptcy and Jerry receives $1,500 in total and final payment for his claim? c. How will your answer to Part a change if the announcement and the reimbursement do not occur until late in 2022, after Jerry has already filed his tax return for 2021?

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter13: Property Transactions: Determination Of Gain Or Loss, Basis Considerations, And Nonta Xable Exchanges

Section: Chapter Questions

Problem 44P

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