Question 5 (Chapter 7)Connor's house burns down in a wildfire. The wildfire was a federally-declared disaster. The firedestroyed one personal-use computer and damaged another personal-use computer. Thedestroyed computer was worth $18,000 at the time of the fire (Connor originally paid S25,000for it). The damaged computer was worth $3,000 at the time of the fire and $2,000 after the fire(Connor originally paid S6,000 for it). Connor receives $12,000 in insurance proceeds for thedestroyed computer and $500 in insurance proceeds for the damaged computer. Connor’s AGI isS50,000.FairFairAmount ofAdjustedMarketMarketInsuranceAssetValueBeforeCasualty Loss(before adjustment)BasisValueRecoveryAfterDestroyedComputerDamagedComputerTotalDeductibleCasualtyLoss

GIVEN Connor's house burns down in a wildfire. The wildfire was a federally-declared disaster. The…

Answered: Question 5 (Chapter 7) Connor's house…

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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Mick was a flood victim and had to spend a good amount to restore his home after the flood. His church held a special collection and gave him $1,500. Also, his employer gave him $1,000 to help him in "his time of need." How much gross income must Mick recognize from the receipt of the $2,500? How likely would Mick be audited?
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.)
Jes had a personal casualty loss in 20X1 due to a hurricane damaging his home. The area where his loss occurred was a declared federal disaster area. Jes’s 20X1 adjusted gross income was $ 200,000. • The fair market value of John’s home before the casualty was $ 450,000, the fair market value after the casualty was $ 275,000.• John purchased his home 6 years ago for $ 150,000 and made no capital improvements while he owned the house.• John received $ 110,000 from his insurance company due to this loss. How much will Jes deduct as a casualty loss in 20X1 if he itemizes his deductions? a. Zerob. $ 65,000c. $ 40,000d. $ 44,900e. $ 19,900
Your client, a carpenter, donated one of his handcrafted wooden desks to his church, a qualified public charity. The church sold the desk at an auction for $3,500, which is comparable to the standard price for the client's other woodwork. He calculated his costs as follows: Wood $1,000 Other materials $300 Rent for workshop $500 Time and services $1,700 This is his only charitable contribution. He itemizes deductions and has an adjusted gross income of $80,000. What is the maximum current year income tax deduction allowable for the client's charitable contribution? A)$3,500 B)$1,800 C)$500 D)$1,300
8. Which of the following best illustrates a moral hazard? . Because he has plenty of insurance, Cameron does not take steps to make his property safe when most of his neighbors have been vandalized or burglarized. . The coverage on Carl's residence has increased each year, but the value of his hom has declined due to neighborhood influences and his home's state of disrepair. . Chet purchases actual cash value, rather than replacement, coverage in order to save money on his homeowners insurance premiums. . When Clarke's empty property is vandalized, he moves furniture into the house and damages it in order to submit a larger claim.
The City of Greenville condemned 300 acres of Kayla's farmland. Kayla's land was worth $250,000 and her basis was $62,500. In payment to Kayla, the city gave Kayla 500 acres of similar land. An appraisal indicated that the land Kayla received was worth $265,000. What is Kayla's recognized gain or loss on the involuntary conversion and what is her basis in the land received?
-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.
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If a homeowner's insurance had a replacement cost policy that covered damage to the home and the home was completely destroyed, what amount would the insurance company cover based on the following: - home depreciated value before the damage was $100,000 - home value to rebuild is $150,000 - home mortgage $120,000 - value of neighbour's home $130,000
Reynaldo and Sonya, a married couple, had flood damage in their home due to a dam break near their home in 2021, which was declared a Federally Designated Disaster Area. The flood damage ruined the furniture that was stored in their garage. The following items were completely destroyed and not salvageable: Damaged Items Antique poster bed Pool table Large flat-screen TV FMV Just Prior Original Item Cost (Basis) $ 6,100 14,025 4,425 Casualty loss deduction to Damage $ 8,200 8,375 1,250 Required: Their homeowner's insurance policy had a $11,485 deductible for the personal property, which was deducted from their insurance reimbursement of $15,725, resulting in a net payment of $4,240. Their AGI for 2021 was $45,000. What is the amount of casualty loss that Reynaldo and Sonya can claim on their joint return for 2021?

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