Problem 7-33 (LO. 3, 4, 8) Olaf lives in the state of Minnesota. In 2020, a tornado hit the area and damaged his home and automobile. Applicable information is as follows: Adjusted FMV FMV Insurance Item Basis before after Proceeds Home $350,000 $500,000 $100,000 $280,000 Auto 60,000 40,000 10,000 20,000 Because of the extensive damage caused by the tornado, the President designated the area a Federal disaster area. Olaf and his wife, Anna, always file a joint return. Their 2019 tax return shows AGI of $180,000 and taxable income of $145,000. In 2020, their return shows AGI of $300,000 and taxable income (exclusive of the casualty loss deduction) of $225,000. Assume the taxpayers are in the 22% tax bracket in 2019 and the 24% tax bracket in 2020. Determine the amount of Olaf and Anna's loss and the year in which they should take the loss. Item Amount of Loss Home Auto Total loss Less: statutory floor amount Loss before statutory % of AGI Amount of loss on last year's return: Loss Less: statutory % of AGI Total loss Amount of loss on current year's return: Loss Less: statutory % of AGI Total loss Olaf and Anna should include the loss on the return, because the tax savings is greater.

Problem 7-33 (LO. 3, 4, 8) Olaf lives in the state of Minnesota. In 2020, a tornado hit the area and damaged his home and automobile. Applicable information is as follows: Adjusted FMV FMV Insurance Item Basis before after Proceeds Home $350,000 $500,000 $100,000 $280,000 Auto 60,000 40,000 10,000 20,000 Because of the extensive damage caused by the tornado, the President designated the area a Federal disaster area. Olaf and his wife, Anna, always file a joint return. Their 2019 tax return shows AGI of $180,000 and taxable income of $145,000. In 2020, their return shows AGI of $300,000 and taxable income (exclusive of the casualty loss deduction) of $225,000. Assume the taxpayers are in the 22% tax bracket in 2019 and the 24% tax bracket in 2020. Determine the amount of Olaf and Anna's loss and the year in which they should take the loss. Item Amount of Loss Home Auto Total loss Less: statutory floor amount Loss before statutory % of AGI Amount of loss on last year's return: Loss Less: statutory % of AGI Total loss Amount of loss on current year's return: Loss Less: statutory % of AGI Total loss Olaf and Anna should include the loss on the return, because the tax savings is greater.

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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36. LO.3, 4, 8 Olaf lives in the state of Minnesota. In May 2022, a tornado hit the area and damaged his home and automobile. Applicable information is as follows: Item Home Auto Adjusted Basis $350,000 60,000 FMV before $500,000 40,000 FMV after $100,000 10,000 Insurance Proceeds $280,000 20,000 Because of the extensive damage caused by the tornado, the President designated the area a Federal disaster area. Olaf and his wife, Anna, always file a joint return. Their 2021 tax return shows AGI of $180,000 and taxable income of $145,000. In 2022, their return shows AGI of $300,000 and taxable income (exclusive of the casualty loss deduction) of $245,000. Determine the amount of Olaf and Anna's loss and the year in which they should take the loss.
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Problem 5-37 (Algorithmic) (LO. 2) Matt, age 61, is an officer of Blue Company, which provides him with the following nondiscriminatory fringe benefits in 2021: • Hospitalization insurance premiums for Matt and his dependents. The cost of the coverage for Matt is $2,350 per year, and the additional cost for his dependents is $4,300 per year. The plan has a $2,000 deductible, but his employer contributed $1,500 to Matt's Health Savings Account (HSA). Matt withdrew only $700 from the HSA, and the account earned $25 of interest during the year. • Insurance premiums of $775 for salary continuation payments. Under the plan, Matt will receive his regular salary in the event he is unable to work due to illness. Matt collected $4,100 on the policy to replace lost wages while he was ill during the year. • Matt is a part-time student working on his bachelor's degree in engineering. His employer reimbursed his $3,600 tuition under a plan available to all full-time employees. For each of the…
A hurricane (in a federally declared disaster are) destroys Kirk’s boat in 2020. The boat is worth $40,000, and Kirk paid $30,000 for the boat two years ago. The boat is a personal use asset. Kirk’s AGI for 2020 is $40,000. a. What is the casualty deduction that Kirk can take as an itemized deduction in 2020?
Information provided for Alexis • Alexis has been certified as impaired by a medical doctor and requires indefinite care from Johnny and Moira She received $5,000 from social assistance • She has a part time job and made $6,000. El of $95, CPP of $270, enhanced CPP of $30 and federal income taxes of $900 were deducted from her pay • • She took a couple courses at Brock University on a part time basis and Moira and Johnny paid the tuition fees which totalled $2,000 • She incurred $7,500 in medical expenses for physiotherapy and registered massage therapy REQUIRED: Calculate Alexis's federal and provincial income tax owing
3. Johnathan was provided a private health care plan for his family. The employer paid $3000 of premiums for this plan. He also earned a cash bonus of $800 for being the hardest working employee during the year. Additionally, he received a large painting as a Christmas present from his employer, which has a value of $1250. Answer the question: Private health care plan is ??
Problem 14-59 (LO 14-5) (Algo) Tamar owns a condominium near Cocoa Beach in Florida. In 2023, she incurs the following expenses in connection with her condo: Insurance. Advertising expense Mortgage interest Property taxes $ 1,330 700 5,700 1,330 750 Repairs & maintenance. Utilities Depreciation 1,030 12,050 During the year, Tamar rented out the condo for 83 days, receiving $15,500 of gross income. She personally used the condo for 53 days during her vacation. Tamar's itemized deduction for nonrental taxes is less than $10,000 by more than the property taxes allocated to the rental use of the property. Assume Tamar uses the Tax Court method of allocating expenses to rental use of the property. Assume 365 days in the current year. Note: Do not round apportionment ratio. Round all other dollar values to the nearest whole dollar amount. Required: a. What is the total amount of for AGI (rental) deductions Tamar may deduct in the current year related to the condo (assuming she itemizes…
Problem 10-24 (LO. 2) Paul, suffers from emphysema and severe allergies and, upon the recommendation of his physician, has a dust elimination system installed in his personal residence. In connection with the system, Paul incurs and pays the following amounts during 2020: Doctor and hospital bills $4,500 Dust elimination system 10,000 Increase in utility bills due to the system 450 Cost of certified appraisal 300 In addition, Paul pays $750 for prescribed medicines. The system has an estimated useful life of 20 years. The appraisal was to determine the value of Paul's residence with and without the system. The appraisal states that his residence was worth $350,000 before the system was installed and $356,000 after the installation. Paul's AGI for the year was $50,000. a. What is the total of Paul's qualifying medical expenses for 2020?$fill in the blank 1 b. What is his medical expense deduction for 2020?$fill in the blank 2
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