Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Chapter 8, Problem 19P
To determine
Introduction:A business casualty loss is a loss that occurred due to the destruction of property or due to an accident. The amount of casualty loss is adjusted in the case by deducting the insurance reimbursement from an insurance basis. If the property is partially destroyed, the loss is either the insurance proceeds less adjusted basis at the time of the casualty or fair market value whichever is less.
The amount of gain or loss as a result of casualty.
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Virginia has business property that is stolen and partially destroyed by the time it was recovered. She receives an insurance reimbursement of $5,000 on property that had a $14,000 basis and a decrease in market value of $10,000 due to damage caused by the theft. What is the amount of Virginia's casualty loss?
a.$4,000
b.$5,000
c.$14,000
d.$10,000
e.None of these choices are correct.
Sally is an employee of Blue Corporation. Last year, she purchased a very expensive computer with her own funds. She used the computer 100% for business purposes. During the current year, the computer was completely destroyed in a fire. Blue Corporation did not reimburse her for her loss.
Discuss whether Sally’s loss will create or increase Sally’s net operating loss. How does Sally treat the loss (carryback or/and carryforward periods)? If a taxpayer who sustains a casualty loss in an area designated by the President of the United States as a disaster area, he or she may take the loss in the year in which the loss occurred or elect to take the loss in the previous year.
Identify factors that should be considered in deciding in which year to take the loss
] In January, a flood which was declared a federal disaster, damaged Danny’s carpeting and furniture. In March, his golf cart was damaged in an accident when it was hit by a car. He was able to establish the following information to determine his losses on these assets.
Asset FMV before casualty FMV after casualty Insurance recovery Cost Date purchased
Carpet
$5,600
$1,100
$2,000
$6,000
10 months ago
Furniture
5,500
1,500
3,200
3,000
11 years ago
Golf Cart
6,500
2,000
1,500
7,000
8 months ago
Danny’s AGI is $32,000 before considering these casualties and he has $12,000 of other itemized deductions. Determine Danny’s deductible casualty loss for 2019.
Chapter 8 Solutions
Income Tax Fundamentals 2020
Ch. 8 - Alice purchases a rental house on August 22,2019,...Ch. 8 - An asset (not an automobile) put in service in...Ch. 8 - An asset (not an automobile) put in service in...Ch. 8 - James purchased office equipment for his business....Ch. 8 - Which of the following statements with respect to...Ch. 8 - Which of the following is not true about the MACRS...Ch. 8 - On July 20,2019, Kelli purchases office equipment...Ch. 8 - Which of the following is not considered a limit...Ch. 8 - In 2019, Ben purchases and places in service a new...Ch. 8 - In 2019, Ben purchases and places in service a new...
Ch. 8 - Prob. 11MCQCh. 8 - Prob. 12MCQCh. 8 - Prob. 13MCQCh. 8 - In 2019, Mary sells for $24,000 a machine used in...Ch. 8 - Prob. 15MCQCh. 8 - Prob. 16MCQCh. 8 - Virginia has business property that is stolen and...Ch. 8 - Pat sells land for $25,000 cash and a $75,000...Ch. 8 - Prob. 19MCQCh. 8 - Prob. 20MCQCh. 8 - Oscar owns a building that is destroyed in a...Ch. 8 - Prob. 22MCQCh. 8 - Prob. 1PCh. 8 - Prob. 2PCh. 8 - 3. Mike purchases a new heavy-duty truck (5-year...Ch. 8 - On March 8,2019, Holly purchased a residential...Ch. 8 - Prob. 5PCh. 8 - Prob. 6PCh. 8 - Calculate the following: The first year of...Ch. 8 - During 2019, William purchases the following...Ch. 8 - On February 2,2019, Alexandra purchases a personal...Ch. 8 - On September 14,2019, Jay purchased a passenger...Ch. 8 - Tom has a successful business with $100,000 of...Ch. 8 - Prob. 14PCh. 8 - Annie develops a successful tax practice. She...Ch. 8 - Prob. 18PCh. 8 - Prob. 19PCh. 8 - Prob. 20PCh. 8 - Prob. 21P
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