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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An office machine used by Josie in her accounting business was completely destroyed by fire. The adjusted basis of the machine was $9,250 (original basis of $13,875 less accumulated depreciation of $4,625). The machine
was not insured.
Calculate the amount and nature of Josie's gain or loss as a result of this casualty. (Assume this is the taxpayer's only casualty gain or loss.)
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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.
Casualty Losses. Tony is a carpenter who owns his own furniture manufacturing business.
During the current year, a tornado (a federally declared disaster) damaged several pieces of
equipment and destroyed his delivery truck and his personal automobile, which he often
kept in the workshop garage. The asset descriptions and related values are as follows:
Adjusted Insurance
Basis
FMV
FMV
Cost to
Before Casualty After Casualty Repair/Replace
$ 8,700
9,000
13,800
32,000
12,000
Asset
Proceeds
$ 9,000
3,000
15,300
17,500
28,000
$ 3,700
7,800
11,400
16,000
12,000
$4,000
Equipment A
Equipment B
Equipment C
Delivery Truck
Automobile
$12,300
8,100
Not Available Not Available
18,000
15,000
Although he could not obtain its fair market value after the casualties, Tony decided to
repair rather than replace Equipment C.
Before considering any deductions because of these casualties, Tony's AGI is $80,000.
What deductions may Tony take relating to these losses?
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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