Roberta was involved in an automobile accident in 2021. Her car was used 60% for business and 40% for personal use. The car had originally cost $40,000. At the time of the accident, the car was worth $20,000 and Alicia had taken $8,000 of depreciation. The car was totally destroyed and Roberta had let her car

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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On July 20, 2022, Mary purchased a passenger automobile that is used 75% for business. The automobile cost $60,000. If she does not elect section 179 and bonus depreciation, what is the depreciation on the automobile for 2022?
Teresa's manufacturing plant is destroyed by fire. The plant has an adjusted basis of $270,000, and Teresa receives insurance proceeds of $410,000 for the loss. Teresa reinvests $420,000 in a replacement plant within 2 years of receiving the insurance proceeds.
Estelle owns The Estelle Talent Agency in New York. On November 10, 2020, she purchased office furniture (7-year property) for $500,000. In addition, she purchased a printing machine (7-year property) on February 22, 2020 for $200,000. The office furniture and printing machine were the only two assets Estelle purchased in 2020, and she placed them into business use on the respective date of the purchase. Estelle has chosen not to elect bonus depreciation or Section 179 expensing for either asset. Answer the following two questions. For credit, you must round your answer to the NEAREST DOLLAR. Do NOT enter the dollar sign in your answer - only enter the numbers (e.g., X,XXX). For example, one thousand dollars should be entered as 1,000. Enter zero (i.e., “0”) where necessary. (b) Assume that Estelle sells the printing machine on June 1, 2022. What is Estelle’s cost recovery deduction for the printing machine in 2022? $
Heather owns a two-story building. The building is used 40% for business 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 fair market value was $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 asset had an adjusted basis of $50,000 and a fair market value of $65,000. These assets were also totally destroyed. If Heather's AGI is $100,000 before considering the effects of the fire, determine her itemized deduction as a result of the fire. Also determine Heather's AGI
Karyn loaned $32,000 to her co-worker to begin a new business several years ago. If her co worker declares bankruptcy on june 22 of the current year, how much of the bad debt loss will Karyn be able to deduct this year?
In 2000, Ms. Boisvert became a homeowner, acquiring a residence in Halifax at a cost of $135,000. In 2011, she was transferred by her employer to Winnipeg. She rented accommodations in Winnipeg and rented the Halifax residence. Ms. Boisvert elected to be deemed not to have converted the property to an income producing use. She did not claim CCA on the property during the period that it was rented. In July of 2023, after 24 years of ownership, she sold the Halifax house for $207,000. She had decided she would not return to Halifax. What is the minimum capital gain that she must include in her income for 2023?
Thomas and Courtney are married, and they will file a joint return. In 2023, they sold an undeveloped plot of land. They had purchased the land in 2018 as an investment. Unfortunately, the value of the land decreased, and they incurred a $5,000 loss at the time of sale. They had no other capital gains or losses during the year, and they had no prior-year carryover losses. How much of the loss from the sale of the land may the couple use to offset their 2023 ordinary income? $0 $1,500 $3,000 $5,000
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Hana is in the 24% tax bracket and owns depreciable business equip-ment that she purchased several years ago for $135,000. She has taken $100,000 of depreciation on the equipment, and it is worth $55,000. Hana’s niece, Michelle, is starting a new business and is short of cash. Michelle has asked Hana to gift the equipment to her so that Michelle can use it in her business. Hana no longer needs the equipment. Identify the alternatives available to Hana if she wants to help Michelle and the tax effects of those alternatives. (Assume that all alternatives involve the business equipment in one way or another, and ignore the gift tax.)