Loss on building (lesser of basis ordecline in FMV)Less: Insurance reimbursementGain on business portionLoss on personal portionLoss on business contentsLess: Insurance recoveryLoss on business contentsLoss on personal contentsLess: Insurance recoveryGain on personal contentsShow Transcribed Text✔✔✓✓Adjusted Gross IncomeAGI before the effects of the fireBusiness gain buildingBusiness loss contentsAGINet business casualty lossItemized DeductionPersonal casualty gainPersonal casualty loss to extent of gainNet personal casualty gainBusinessPortionBalance of personal casualty loss3220,000240,00020,000220,000b. Heather's AGI is $100,000 before considering the effects of the fire. Determine her itemized deduction and AGI after considering theeffects of the fire.175,00045,000 ✓20,000 ✓45,000 ✓)PersonalPortion15,000 ✓15,000 ✔)420,000360,00060,000$100,00025,000 ✔)075,000 Heather owns a two-story building. The building is used 40% for business use and 60% for personal use. During 2022, a fire caused majordamage to the building and its contents. Heather purchased the building for $800,000 and has taken depreciation of $100,000 on thebusiness portion. At the time of the fire, the building had a fair market value of $900,000. Immediately after the fire, the fair market valuewas $200,000. The Insurance recovery on the building was $600,000. The contents of the building were insured for any loss at fair marketvalue. 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.Cost of buildingLess: DepreciationAdjusted basisDecline in FMVTotal$800,000(100,000)$700,000$700,000BusinessPortion320,000100,000220,000280,000 ✓PersonalPortion480,0000480,000420,000

Total answers posted by the expert is: 3248 Total Business portion Personal Portion…

Answered: Heather owns a two-story building. The…

Business

Accounting

Heather owns a two-story building. The build-

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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Question

Loss on building (lesser of basis or
decline in FMV)
Less: Insurance reimbursement
Gain on business portion
Loss on personal portion
Loss on business contents
Less: Insurance recovery
Loss on business contents
Loss on personal contents
Less: Insurance recovery
Gain on personal contents
Show Transcribed Text
✔
✔
✓
✓
Adjusted Gross Income
AGI before the effects of the fire
Business gain building
Business loss contents
AGI
Net business casualty loss
Itemized Deduction
Personal casualty gain
Personal casualty loss to extent of gain
Net personal casualty gain
Business
Portion
Balance of personal casualty loss
3
220,000
240,000
20,000
220,000
b. Heather's AGI is $100,000 before considering the effects of the fire. Determine her itemized deduction and AGI after considering the
effects of the fire.
175,000
45,000 ✓
20,000 ✓
45,000 ✓)
Personal
Portion
15,000 ✓
15,000 ✔)
420,000
360,000
60,000
$100,000
25,000 ✔)
0
75,000

Heather owns a two-story building. The building is used 40% for business use and 60% for personal use. During 2022, 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.
Cost of building
Less: Depreciation
Adjusted basis
Decline in FMV
Total
$800,000
(100,000)
$700,000
$700,000
Business
Portion
320,000
100,000
220,000
280,000 ✓
Personal
Portion
480,000
0
480,000
420,000

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