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- 1. Tim loaned a friend $4,000 to buy a used car. In the current year, Tim's friend declares bankruptcy and the debt is considered totally worthless. What amount may Tim deduct on his individual income tax return for the current year as a result of the worthless debt, assuming he has no other capital gains or losses for the year? a.$3,000 short-term capital loss b.$4,000 short-term capital loss c.$3,000 ordinary loss d.$4,000 ordinary loss e.$2,000 short-term capital loss 2. An asset's adjusted basis is computed as: a.Original basis − capital improvements + accumulated depreciation. b.Original basis + capital improvements − accumulated depreciation. c.Original basis + capital improvements + gain or loss realized. d.Original basis + capital improvements + accumulated depreciation. e.None of these choices are correct. 3. Sol purchased land as an investment on January 12, 2018 for $85,000. On January 31, 2021 Sol sold the land for $90,000 cash. What is the nature of the gain or loss?…Ed Stone has invested P400,000 in a privately held family corporation. The corporation does not do well and must declare bankruptcy. What amount does Stone stand to lose? * Up to his total investment of P400,000. O Zero. The P400,000 plus any personal assets the creditors demand. P200,000.Bradley goes into bankruptcy owing $25,000 as wages to his four employees. There is enough in his estate to pay all costs of administration and enough to pay his employees, but nothing will be left for general creditors. Do the employees take all the estate? If so, under what conditions? If the general creditors received nothing, would these debts be discharged?
- Ferris owns an interest in, but does not materially participate in, an activity. He has $30,000 at-risk. The business produced a loss in the current year and Ferris's share of the loss is $45,000. Assuming Ferris has no passive income, how much of the $45,000 loss will be deductible by Ferris? Multiple Choice $0. $30,000. Cannot be determined. $45,000.LO.4 Vic, who was experiencing financial difficulties, was able to adjust his debts as follows: a. Vic is an attorney. Vic owed his uncle 25,000. The uncle told Vic that if he serves as the executor of the uncles estate, Vics debt will be canceled in the uncles will. b. Vic borrowed 80,000 from First Bank. The debt was secured by land that Vic purchased for 100,000. Vic was unable to pay, and the bank foreclosed when the liability was 80,000, which was also the fair market value of the property. c. The Land Company, which had sold land to Vic for 80,000, reduced the mortgage on the land by 12,000. Determine the tax consequences to Vic.Virginia has business property that is stolen and partially destroyed by the time it was recovered. She receives an insurance reimbursement of $6,000 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? $14,000 $8,000 $10,000 $4,000 None of the above
- 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.Mr. Mango, a single taxpayer, lent a friend $8,000. The friend did not repay the loan when it was due and then declared bankruptcy. The loan is totally uncollectible. Mr. Mango also was notified that the Oak corporate bonds he owned became worthless on March 3, 2020. He purchased the bonds for $22,000 on November 10, 2019. He also had a $60,000 loss on the disposition of § 1244 corporate stock that he purchased several years ago. a. For the loan, bonds, & stock, what is the amount and character of gain and/or income and/or loss? 25% LTCG, 25% LTCL, 28% LTCG, 28% LTCL, 0/15/20 LTCG, 0/15/20 LTCL, STCG, STCL, ordinary gain, ordinary loss, 1245 recapture, 1250 recapture, 1231 gain, 1231 loss? b. If Mr. Mango has gross income of $65,000 from wages, what is his AGI. c. What are the nature of Mr. Mango’s loss carry forwards?ces Mrs. Beard recognized a $12,400 capital loss on the sale of corporate stock this year. Required: a. How much loss can she deduct if she had no other capital transactions this year? b. How much loss can she deduct if she recognized a $3,890 capital gain on the sale of an antique rug and had no other capital transaction this year? c. How much loss can she deduct if she recognized a $15,720 capital gain on the sale of investment land and had no other capital transaction this year? Complete this question by entering your answers in the tabs below. Required A Required B Required C How much loss can she deduct if she had no other capital transactions this year? Deductible Loss
