Problem 8-19Capital Gains and Casualty Gains and Losses (LO 8.9)An office machine used by Josie in her accounting business was completely destroyed by fire. The adjusted basis of the machine was $8,000 (originalbasis of $14,000 less accumulated depreciation of $6,000). 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.)Amount of gain or loss: $Ordinary loss

As the machine is not insured, there is no way to recover the amount lost.

Answered: Capital Gains and Casualty Gains and…

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter8: Depreciation And Sale Of Business Property

Section: Chapter Questions

Problem 19P

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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.) Amount of gain or loss: $
77 Week 5 Discussion Forum Umair sold some equipment he used in his business in 8/29/19 that was originally purchased for $65,000 on 11/21/18. The equipment was depreciated using the 7 yr MACRS method for a total of $17,249. Assume there is no additional netting of gains and losses for this taxpayer: Assume Umair sold the equipment for $45,000: 1. What is the amount of realized gain or loss on the sale of equipment? 2. Is the nature of the gain or loss considered ordinary or long term?
Problem 11-53 (c) (LO. 3, 8) Several years ago, Sabrina acquired an apartment building that currently generates a loss of $87,000. She has AGI of $340,000 before considering the loss. Sabrina is not an active participant in the activity. Complete the paragraph below explaining what effect the loss will have on her AGI. The activity is activity, and Sabrina is not an active participant. Therefore, deduction is allowed under the real estate rental exception. The $87,000 loss is under the rules, and Sabrina's AGI is $fill in the blank 5.
LO.2 A sculpture that Korliss Kane held for investment was destroyed in a flood. The sculpture was insured, and Korliss had a 60,000 gain from this casualty. He also had a 17,000 loss from an uninsured antique vase that was destroyed by the flood. The vase was also held for investment. Korliss had no other property transactions during the year and has no nonrecaptured 1231 losses from prior years. Both the sculpture and the vase had been held more than one year when the flood occurred (i.e., both are long-term nonpersonal use capital assets). Compute Korlisss net gain or loss, and identify how it would be treated. Also write a letter to Korliss, explaining the nature of the gain or loss. Korlisss address is 2367 Meridian Road, Hannibal, MO 63401.
LO.1 A list of the items that Faith sold and the losses she incurred during the current tax year is as follows: Yellow, Inc. stock $ 1,600Faith’s personal use SUV 8,000Faith’s personal residence 10,000City of Newburyport bonds 900She also had a theft loss of $1,500 on her uninsured business use car. Calculate Faith’s deductible losses.
Problem 5-16Medical Expenses (LO 5.6) Janet needs an elevator seat attached to her stairs since she has a medical condition that makes her unable to climb the stairs in her house. The $10,000 spent on the elevator seat does not increase the value of her house according to a local appraiser. How much of the capital asset is deductible in Janet's tax return as a medical expense? $ is deductible in the current year as an expense before the AGI limitation.
49. Stanley sold a building used in his business and held for 5 years for a $50,000 loss. It is the only asset he sold. After netting, the loss will be an ordinary loss. a. False b. True
Problem 5-36 (LO. 2) Leigh sued an overzealous bill collector and received the following settlement: Damage to her automobile that the collector attempted to repossess Physical damage to her arm caused by the collector Loss of income while her arm was healing Punitive damages $3,300 $15,000 $6,000 $80,000 a. Regarding Leigh's settlement, classify the following as either "Included in" or "Excluded from" her gross income. Included in/Excluded from Income Damage to her automobile that the collector attempted to repossess • Physical damage to her arm caused by the collector • Loss of income while her arm was healing • Punitive damages b. Assume that Leigh also collected $25,000 of damages for slander to her personal reputation caused by the bill collector misrepresenting the facts to Leigh's employer and other creditors. Is this $25,000 included in Leigh's gross income?
Leigh sued an overzealous bill collector and received the following settlement: Damage to her automobile that the collector attempted to repossess $3,300 Physical damage to her arm caused by the collector $15,000 Loss of income while her arm was healing $6,000 Punitive damages $80,000 Question Content Area a. Regarding Leigh's settlement, classify the following as either "Included in" or "Excluded from" her gross income. Included in/Excluded fromIncome • Damage to her automobile that the collector attempted to repossess • Physical damage to her arm caused by the collector • Loss of income while her arm was healing • Punitive damages Question Content Area b. Assume that Leigh also collected $25,000 of damages for slander to her personal reputation caused by the bill collector misrepresenting the facts to Leigh's employer and other creditors. Is this $25,000 included in Leigh's gross income?
Oscar owns a building that is destroyed in a hurricane. His adjusted basis in the building before the hurricane is $130,000. His insurance company pays him $140,000 and he immediately invests in a new building at a cost of $142,000. What is the amount of recognized gain or loss on the destruction of Oscar's building? $0 $10,000 gain $8,000 gain $12,000 gain $2,000 loss
Susie purchased her primary residence on March 15, year 4, for 550,000. She sold it on October 15, year 7, for 240,000. What amount of loss from the sale is recognized on her year 7 income tax return? a. 0 b. 60,000 c. 250,000 d. 310,000

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