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?
Philip, a self-employed salesman, uses his Chevy to travel to potential buyers from his office. During 2020, he drove the car 5,000 miles for business, 3,000 commute miles and 12,000 personal miles. He paid $10,000 two years ago for the car which can be depreciated over 5 years. He has never depreciated the car using any other method than the straight-line method. In the past he has always used the standard mileage rate for car expenses. If his total gasoline and maintenance costs for the car (business and personal) were $2,000, how much may Philip deduct using the standard mileage rate for 2020? How much may he deduct using the actual cost method.
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?
Jennifer files head of household and her personal car, a 2016 Ford Mustang GT, was completely destroyed in a car accident when she was trying to flee from a hurricane in a federal disaster area. She bought the car several years ago for $32,000 and it was worth $23,000 at the time of the accident. What amount may Jennifer deduct as itemized deductions this year if she received $10,000 insurance reimbursement and her AGI is $40,000?
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
Mary owns a home with a with a replacement value of $331,195. She purchased home insurance in the amount of $200,000, and therefore does not meet the 80% rule. If Mary's deductible is $3,000 and a BBQ fire caused $75,000 worth of damage, how much will Mary have to pay herself?
In 2020, Susan (who files as single) had silverware worth $10,000 (basis $6,000) stolen from her home due to a federal declared disaster area. Her insurance company told her that her policy did not cover the theft. In 2020, Susan’s other itemized deductions were $2,000, and she had AGI of $40,000. In February 2021, Susan’s insurance company decided that Sarah’s policy did cover the theft of the silverware and they paid Susan $4,000. Determine the tax treatment of the $4,000 received by Susan during 2021. a. None of the $4,000 should be included in gross income. b. $2,000 should be included in gross income. c. $4,000 should be included in gross income. d. Last year’s return should be amended to include the $4,000.
Sonali and Nilesh are married. On December 30th of last year, Sonali contributed $25,000 to a spousal RRSP under which Nilesh is the annuitant. At that time, she also contributed $10,000 to her own individual RRSP. No further contributions were made to the spousal RRSP. Assume on June 15th of next year, the couple has a financial emergency that requires Nilesh to withdraw $15,000 from his spousal RRSP and Sonali to withdraw $10,000 from her individual RRSP. Based on these transactions, what statement is correct? Question 27 options: a) Sonali must report $10,000 on her tax return for next year. b) Nilesh must report $15,000 on his tax return for next year. c) Sonali must report $25,000 on her tax return for next year. d) Nilesh was able to claim a $25,000 RRSP deduction for the previous tax year.