Jed, age 55, is married with no children. During 2019, Jed had the following income and expense items:a. Three years ago, Jed loaned a friend $10,000 to help him purchase a new car. In June of the current year, Jed learned that his friend had been declared bankrupt and had left the country. There is no possibility that Jed will ever collect any of the $10,000. b. In April of last year, Jed purchased some stock for $5,000. In March of the current year, the company was declared bankrupt, and Jed was notified that his shares of stock were worthless.c. Several years ago Jed purchased some § 1244 stock for $120,000. This year he sold the stock for $30,000.d. In July of this year, Jed sold some land that he had held for two years for $60,000. He had originally paid $42,000 for the land.e. Jed received $40,000 of interest income from State of Minnesota bonds.f. In September, Jed’s home was damaged by an earthquake; Jed’s county was declared a Federal disaster area by the President. Jed’s basis in his home was $430,000. The value of the home immediately before the quake was $610,000.After the quake, the home was worth $540,000. Because earthquake damage was an exclusion on Jed’s homeowner’s insurance policy, he received no insurance recovery.g. Jed received a salary of $80,000.h. Jed paid home mortgage interest of $14,000.If Jed files a joint return for 2019, determine his NOL for the 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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Jed, age 55, is married with no children. During 2019, Jed had the following income and expense items:
a. Three years ago, Jed loaned a friend $10,000 to help him purchase a new car. In June of the current year, Jed learned that his friend had been declared bankrupt and had left the country. There is no possibility that Jed will ever collect any of the $10,000. b. In April of last year, Jed purchased some stock for $5,000. In March of the current year, the company was declared bankrupt, and Jed was notified that his shares of stock were worthless.
c. Several years ago Jed purchased some § 1244 stock for $120,000. This year he sold the stock for $30,000.
d. In July of this year, Jed sold some land that he had held for two years for $60,000. He had originally paid $42,000 for the land.
e. Jed received $40,000 of interest income from State of Minnesota bonds.
f. In September, Jed’s home was damaged by an earthquake; Jed’s county was declared a Federal disaster area by the President. Jed’s basis in his home was $430,000. The value of the home immediately before the quake was $610,000.
After the quake, the home was worth $540,000. Because earthquake damage was an exclusion on Jed’s homeowner’s insurance policy, he received no insurance recovery.
g. Jed received a salary of $80,000.
h. Jed paid home mortgage interest of $14,000.
If Jed files a joint return for 2019, determine his NOL for the year.

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