Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Chapter 17, Problem 24AP
To determine
Determine deductible casualty loss when AGI is a) $163,000 b) $380,000.
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Mr. and Mrs. Marcum live in southern California in an area devastated by wildfires that the President designated a federally declared
disaster. Because of fire damage, the Marcums had to replace the roof of their home at a cost of $62,000. Their homeowners
insurance reimbursed them for only $37,200 of the cost. The Marcums' $24,800 unreimbursed loss was their only casualty loss this
year. Assume the taxable year is 2023.
Required:
a. Compute their deductible casualty loss if their AGI is $166,500.
b. Compute their deductible casualty loss if their AGI is $383,500.
Complete this question by entering your answers in the tabs below.
Required Required B
Compute their deductible casualty loss if their AGI is $166,500.
Note: Leave no cells blank be sure to enter "0" wherever required.
Mr. and Mrs Marcum's deductible casualty loss
Required B >
Alicia's automobile destroyed in a tornado on 5/4/2021. This did not occur in a Federally declared disaster
area. Her car was used 70% for business and 30% for personal use. The car had originally cost $40,000. At
the time of the accident, the car was worth $20,000 and Alicia had taken $8,000 of depreciation. The car
was totally destroyed and Alicia had let her car insurance expire. If her AGI is $50,000 (before considering
the loss), determine her AGI and itemized deduction for the casualty loss.
$34,000;$-0-
$30,000;$-0-
$26,000;$5,700
None of these
$34,000;$4,500
Eric and Susan just purchased their first home, which cost $166,000. They purchased a homeowner’s policy to insure the home for $156,000 and personal property for $93,000. They declined any coverage for additional living expenses. The deductible for the policy is $500.
Soon after Eric and Susan moved into their new home, a strong windstorm caused damage to their roof. They reported the roof damage to be $26,000. While the roof was under repair, the couple had to live in a nearby hotel for three days. The hotel bill amounted to $680. Assuming the insurance company settles claims using the replacement value method, what amount will the insurance company pay for the damages to the roof?
Chapter 17 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 17 - Prob. 1QPDCh. 17 - Discuss the tax policy reasons why gifts and...Ch. 17 - In what way does the tax law give preferential...Ch. 17 - Prob. 4QPDCh. 17 - A basic principle of federal tax law is that a...Ch. 17 - Prob. 6QPDCh. 17 - If an individual purchases property insurance on...Ch. 17 - Prob. 8QPDCh. 17 - Last year, both the Burton family and the Awad...Ch. 17 - Prob. 10QPD
Ch. 17 - Prob. 11QPDCh. 17 - Prob. 12QPDCh. 17 - Prob. 1APCh. 17 - Prob. 2APCh. 17 - Buddy Bushey is a student at a local community...Ch. 17 - Four years ago, Lyle Mercer was injured in a...Ch. 17 - Ann Moore receives a 1,000 monthly payment from...Ch. 17 - Will and Sandra Emmet were divorced this year. As...Ch. 17 - Prob. 7APCh. 17 - Mr. and Mrs. Nester had the following items of...Ch. 17 - Prob. 9APCh. 17 - Milt Payner purchased an automobile several years...Ch. 17 - Conrad South, a business executive, is an avid...Ch. 17 - Prob. 12APCh. 17 - Mr. and Mrs. Compton paid 9,280 of medical...Ch. 17 - Mr. and Mrs. Moss have major medical and dental...Ch. 17 - Mr. Curtis paid the following taxes. To what...Ch. 17 - Mrs. Stuart paid the following taxes. To what...Ch. 17 - Prob. 17APCh. 17 - Mary Vale contributed a bronze statuette to a...Ch. 17 - Prob. 19APCh. 17 - Prob. 20APCh. 17 - Mr. and Mrs. Remy have the following allowable...Ch. 17 - Prob. 22APCh. 17 - Prob. 23APCh. 17 - Prob. 24APCh. 17 - Mr. and Mrs. Marcum live in Southern California in...Ch. 17 - Prob. 26APCh. 17 - Sandy Assam enjoys betting on horse and dog races....Ch. 17 - Prob. 28APCh. 17 - Mr. and Mrs. Kim, married filing jointly, own a...Ch. 17 - Ms. Imo, who is single, purchased her first home...Ch. 17 - Prob. 31APCh. 17 - Prob. 32APCh. 17 - Prob. 33APCh. 17 - Prob. 1IRPCh. 17 - Prob. 2IRPCh. 17 - Prob. 3IRPCh. 17 - Prob. 4IRPCh. 17 - Prob. 5IRPCh. 17 - Prob. 6IRPCh. 17 - Prob. 7IRPCh. 17 - Mrs. Newton, who is a self-employed author, paid...Ch. 17 - Prob. 9IRPCh. 17 - Prob. 10IRPCh. 17 - Prob. 11IRPCh. 17 - Prob. 12IRPCh. 17 - Prob. 13IRPCh. 17 - Prob. 14IRPCh. 17 - Prob. 15IRPCh. 17 - Prob. 16IRPCh. 17 - Prob. 1RPCh. 17 - Prob. 2RPCh. 17 - Prob. 3RPCh. 17 - Prob. 4RPCh. 17 - Prob. 5RPCh. 17 - Prob. 1TPCCh. 17 - Prob. 2TPCCh. 17 - Prob. 3TPCCh. 17 - Prob. 1CPCh. 17 - Mrs. Cora Yank (age 42) is divorced and has full...Ch. 17 - Tom and Allie Benson (ages 53 and 46) are...
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- Chad owned an office building that was destroyed in a tornado. The area was declared a Federal disaster area. The adjusted basis of the building at the time was 890,000. After the deductible, Chad received an insurance check for 850,000. He used the 850,000 to purchase a new building that same year. How much is Chads recognized loss, and what is his basis in the new building?arrow_forwardOlaf lives in the state of Minnesota. In 2019, a tornado hit the area and damaged his home and automobile. Applicable information is as follows: Because of the extensive damage caused by the tornado, the President designated the area a Federal disaster area. Olaf and his wife, Anna, always file a joint return. Their 2018 tax return shows AGI of 180,000 and taxable income of 140,000. In 2019, their return shows AGI of 300,000 and taxable income (exclusive of the casualty loss deduction) of 220,000. Determine the amount of Olaf and Annas loss and the year in which they should take the loss.arrow_forwardEric and Susan just purchased their first home, which cost $146,000. They purchased a homeowner's policy to insure the home for $136,000 and personal property for $83,000. They declined any coverage for additional living expenses. The deductible for the policy is $500. Soon after Eric and Susan moved into their new home, a strong windstorm caused damage to their roof. They reported the roof damage to be $21,000. While the roof was under repair, the couple had to live in a nearby hotel for three days. The hotel bill amounted to $480. Assuming the insurance company settles claims using the replacement value method, what amount will the insurance company pay for the damages to the roof? Insurance covered amountarrow_forward
- Jes had a personal casualty loss in 20X1 due to a hurricane damaging his home. The area where his loss occurred was a declared federal disaster area. Jes’s 20X1 adjusted gross income was $ 200,000. • The fair market value of John’s home before the casualty was $ 450,000, the fair market value after the casualty was $ 275,000.• John purchased his home 6 years ago for $ 150,000 and made no capital improvements while he owned the house.• John received $ 110,000 from his insurance company due to this loss. How much will Jes deduct as a casualty loss in 20X1 if he itemizes his deductions? a. Zerob. $ 65,000c. $ 40,000d. $ 44,900e. $ 19,900arrow_forwardChristopher's main home was damaged by a tornado, and his county was later deemed a federal disaster area. He incurred $80,000 worth of damage to his home, but $65,000 was reimbursed by his homeowner's insurance. His basis in the home was $175,000 at the time of the tornado. Christopher's employer had a disaster relief fund for its employees. He received $5,000 from the fund and spent the entire amount on repairs to his home. What is Christopher's casualty loss (before the calculation of any limitations)? Group of answer choices $0 $10,000 $15,000 $5,000arrow_forwardJenny, single, age 42, earns $50,000 working in 2022. She has no other income. Her medical expenses for the year total $5,000. During the year, she suffered a nonbusiness casualty loss of $7,500 when her apartment is damaged by flood waters (part of a Federally declared disaster area). Jenny contributed $10,000 to her church. She is trying to decide whether to contribute $1,000 to a traditional IRA. Fill in the table below to see if the IRA contribution reduces taxable income. Don't forget to apply the floors to the medical expenses. The deductible casualty loss has been calculated for you. We will look at personal (nonbusiness) casualty losses in another chapter; note that the nonbusiness casualty loss calculation involves 2 floors. 1. Complete the table to show the effect the IRA contribution would have on Jenny's itemized deductions. Without IRA Contribution Gross Income Contribution to IRA AGI Itemized Deductions Charitable contribution Medical expense deduction Casualty loss…arrow_forward
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- -Betty is an unmarried attorney. During the year a hurricane completely destroys her home, which had a basis of $60,000. The value of her home before the tornado is $100,000 and the value afterwards is $35,000. Betty's home is located in a federally declared natural disaster area. Her AGI is $50,000. What is the amount that Betty can deduct after limitations? Group of answer choices $29,900. $54,900. $59,900. $65,000.arrow_forwardWill purchased a home for $350,000 five years ago. He did significant renovations and additions increasing the value to $425,000. He forgot to update his original policy limits of $280,000. He incurred a $100,000 loss by fire. He has a $2,500 deductible. How much will he be responsible for after accounting for the amount his insurer will pay? In other words, how much of the loss will his insurer not pay?arrow_forwardIn the current year, Brit had a federally declared disaster fire hit her house that damaged a couch and completely destroyed a bed and an antique table. She had no fire insurance. The couch cost $300, the bed $450, and the table $65. Just before the fire, the couch had a fair market value of $70, the bed had a value of $275, and the table had a value of $200. After the fire, the couch was worth $20. Brit's casualty loss before any dollar limitations is А. $815 В. $545 С. $390 D. $525arrow_forward
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