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. Iten Building Equipment Barn Adjusted Basis FMV before Damage FMV after Damage $ 92,100 79,300 118,800 $ 126,900 54,100 183,600 a-1 Loss amount a-2 Last year a-2. Current year 50 e 118,800 Insurance Proceeds $ 57,300 15,400 53,400 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 $62,100 of taxable income last year. Their taxable income for the current year is $201,300, 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. Iten Building Equipment Barn Adjusted Basis FMV before Damage FMV after Damage $ 92,100 79,300 118,800 $ 126,900 54,100 183,600 a-1 Loss amount a-2 Last year a-2. Current year 50 e 118,800 Insurance Proceeds $ 57,300 15,400 53,400 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 $62,100 of taxable income last year. Their taxable income for the current year is $201,300, 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

See similar textbooks

Similar questions

Steve has a manufacturing business In the current year, his storage building is destroyed by fire It had an adjusted basis of $75,000 He received $300,000 from the insurance company and elected to replace the building under the involuntary conversion provisions He built a new storage building for $350,000 What is the basis of the new storage building a$150,000 b$125,000 c$100,000 d$75,000
Bill received $100,000 in insurance proceeds to compensate him 3budiness equipment destroyed by a fire. The adjusted basis of the equipment was $80,000. Bill reinvested $95,000 of the insurance proceeds in replacement business equipment within the time allowed. He wants to defer gain to the maximum extent allowed. Bill must recognize how much gain? A. 2,500 B. 5,000 C. 25,000 D. 450,000
Accounting You have recently been named the chief accountant for Stop Smog Now (SSN), a not-for-profit organization that provides pollution control devices for coal burning plants in developing countries. On February 15, Year 7, SSN received a restricted contribution of $750,000 for the purchase of land and building. On March 11, Year 7, SSN purchased a building and land for $500,000 and $250,000 respectively. The building will be depreciated over 20 years. Year end is March 31. Required: Assuming the Deferral method is used, provide all the journal entries required for February and March of Year 7 Please give me correct entries thnku
Last year, Jose and Josefina Munoz bought a home with a dwelling replacement value of $250,000 and insured it (via an HO-5 policy) for $225,000. The policy reimburses actual cash value and has a $500 deductible, standard limits for coverage C items, and no scheduled property. Recently, burglars broke into the house and stole a new computer with a current replacement value of $1,500 and an estimated useful life of three years. They also took jewelry valued at $2,500 and a coin collection valued at $1,500. If the Munozs’ policy has a 90 percent co-insurance clause, do they have enough insurance? Assuming a 50 percent coverage C limit, calculate how much the Munoz family would receive if they filed a claim for the stolen items. What advice would you give the Munoz family about their homeowner’s coverage?
32 Xavier bought his chicken farm property for $60,000. When he retired, he sold the property to his granddaughter, Julia, for $115,000. At the time of the transfer, the farm was valued at $600,000. Xavier had already used his lifetime capital gains exemption on the disposition of a previous farm property. What was Julia's adjusted cost base (ACB)? O a) $60,000 O b) $115,000 O c) $55,000 O d) $600,000 Previous Question Next Question View Summary CFP®, CERTIFIED FINANCIAL PLANNER® and are certification marks owned outside the U.S. by Financial Planning Standards Board Ltd. (FPSB). FP Canada" is the marks licensing authority for the CFP marks in Canada, through agreement with FPSB.
Please explain Pizza corporation factory was destroyed by a hurricane. The fair market value of the factory at the time of the hurricane was $500,000 and its adjusted basis was $750,000. Pizza received insurance proceeds of $620,000, which it used to immediately buy a new factory. What gain or loss will pizza recognize related to the factory in the current year? $120,000 gain $250,000 loss No gain or loss $130,000 loss
Question Help ▼ Carmen Viers lost everything to a fire and has spent the last eight weeks living in a motel room at a cost of $4,746. Her dwelling, which was destroyed as a result of a lightning strike, was insured with an HO-2 policy for $210,869. Prior to the loss, her home was valued at $217,000, her detached garage and poolhouse were valued at $32,043, and her personal property had an actual cash value of $92,519. To make matters worse she sustained $10,000 in injuries while trying, unsuccessfully, to save her three Greyhound dogs valued at $6,000 each. How much of her total losses and expenses will be reimbursed if she has a $1,000 deductible? The amount of total losses and expenses she will be reimbursed if she has a $1,000 deductible is $ (Round to the nearest dollar.)
Problem 7-34 (LO. 3, 4) Heather owns a two-story building. The building is used 40% for business use and 60% for personal use. During 2020, a fire caused major damage to the building and its contents. Heather purchased the building for $800,000 and has taken depreciation of $100,000 on the business portion. At the time of the fire, the building had a fair market value of $900,000. Immediately after the fire, the fair market value was $200,000. The insurance recovery on the building was $600,000. The contents of the building were insured for any loss at fair market value. The business assets had an adjusted basis of $220,000 and a fair market value of $175,000. These assets were totally destroyed. The personal use assets had an adjusted basis of $50,000 and a fair market value of $65,000. These assets were also totally destroyed. If an amount is zero, enter "0". a. Determine the business and personal gain or loss in regard to the building and its contents. Business Personal Total…
Jonathan has the following separate casualties during the year: Decrease in FairMarket Value AdjustedBasis InsuranceReimbursement HoldingPeriod Business furniture $4,000 $5,000 $ 0 3 years Business machinery 15,000 14,000 10,000 3 years The furniture was completely destroyed while the machinery was partially destroyed. Jonathan also sold business land for a Section 1231 gain of $10,000. Calculate the amount and nature of Jonathan's gains and losses as a result of these casualties. Amount of Gain or Loss Gain or Loss Business furniture $fill in the blank 1 Business machinery $fill in the blank 3 Since both result in a casualty , the losses are from Section 1231 treatment and are treated as losses.
In 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. $525
Alan owns a ranch in Kansas. During the year, a tornado damaged one of his barns and destroyed some equipment. The following information provides the details of the losses Alan suffered from the tornado. Adjusted Basis FMV Before FMV After Insurance Proceeds Barn $ 75,000 $ 90,000 $ 40,000 $ 30,000 Bailer $ 25,000 $ 15,000 $ 0 $ 15,000 Truck $ 15,000 $ 18,000 $ 0 $ 10,000 How much loss from the tornado can he deduct on his tax return for the current year?
-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.