Derrick owns a farm in eastern North Carolina. A hurricane hit the area (a national disaster area was declared) and destroyed a farm building and some farm equipment and damaged a barn. Item Building Equipment Barn Adjusted Basis $ 99,500 84, 100 110,700 FMV before Damage $ 142,000 60,000 170,400 a-1. Loss amount a-2. Last year a-2. Current year FMV after Damage $0 0 110,700 Insurance Proceeds $ 57,000 18,400 45,600 Due to the extensive damage throughout the area, the president of the United States declared all areas affected by the hurricane as a disaster area. Derrick, who files a joint return with his wife, had $50,400 of taxable income last year. Their taxable income for the current year is $166,200, excluding the loss from the hurricane. Required: a-1. Calculate the amount of the loss deductible by Derrick and his wife. a-2. What amount of loss should be adjusted against current and last year?

Derrick owns a farm in eastern North Carolina. A hurricane hit the area (a national disaster area was declared) and destroyed a farm building and some farm equipment and damaged a barn. Item Building Equipment Barn Adjusted Basis $ 99,500 84, 100 110,700 FMV before Damage $ 142,000 60,000 170,400 a-1. Loss amount a-2. Last year a-2. Current year FMV after Damage $0 0 110,700 Insurance Proceeds $ 57,000 18,400 45,600 Due to the extensive damage throughout the area, the president of the United States declared all areas affected by the hurricane as a disaster area. Derrick, who files a joint return with his wife, had $50,400 of taxable income last year. Their taxable income for the current year is $166,200, excluding the loss from the hurricane. Required: a-1. Calculate the amount of the loss deductible by Derrick and his wife. a-2. What amount of loss should be adjusted against current and last year?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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