Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 7, Problem 2RP
To determine
Explain whether the casualty loss should be deducted while computing Person E’s taxable income of 2018 and 2019.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Esther owns a large home on the Southeast Coast. Her home is surrounded by large, mature oak trees that significantly increase the value of her home. In September 2019, a hurricane damaged many of the trees surrounding her home; her region was declared a federal disaster area as a result of the hurricane’s damage. In October 2019, Esther engaged a local arborist to evaluate and treat the trees, but five of the largest trees were seriously weakened by the storm. These trees died from the disease in 2020. Esther has ascertained that the amount of the casualty loss from the death of the five trees is $25,000; however, she is uncertain in which year to deduct this loss. Discuss whether the casualty loss should be deducted in the calculation of Esther’s 2019 or 2020 taxable income.
I want a solution to this problem in a professional way.
Jorge and his wife own a beachfront vacation home in Savannah, Georgia. During the year, high winds from a tropical storm shatter a sliding glass door and rain from the storm causes extensive water damage to the kitchen. The Savannah area qualified for federal disaster relief. Fortunately, during a calm in the storm, Jorge is able to board up the door, which limits the water damage to the kitchen. The items damaged in the storm are:
Cost
ValueBefore
ValueAfter
InsuranceProceeds
Kitchen furniture
$2,085
$1,325
$430
$510
TV
265
200
0
115
Refrigerator
1,000
920
90
775
Linoleum flooring
1,645
880
0
470
In addition, Jorge pays $610 to replace the sliding glass door. The insurance company will not reimburse him for the cost of the new door because the old sliding glass door did not meet the company's standards for a hurricane area.
The amount of Jorge's casualty loss before considering any annual limitations that may apply is…
Alicia's automobile destroyed in a tornado on 5/4/2021. This did not occur in a Federally declared disaster
area. Her car was used 70% for business and 30% 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 Alicia had let her car insurance expire. If her AGI is $50,000 (before considering
the loss), determine her AGI and itemized deduction for the casualty loss.
$34,000;$-0-
$30,000;$-0-
$26,000;$5,700
None of these
$34,000;$4,500
Chapter 7 Solutions
Individual Income Taxes
Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Many years ago, Jack purchased 400shares of Canary...Ch. 7 - Scan is in the business of buying and selling...Ch. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 10DQ
Ch. 7 - Prob. 11DQCh. 7 - Prob. 12DQCh. 7 - Prob. 13DQCh. 7 - Prob. 14DQCh. 7 - Prob. 15DQCh. 7 - Prob. 16DQCh. 7 - Prob. 17DQCh. 7 - Prob. 18DQCh. 7 - Prob. 19DQCh. 7 - Prob. 20DQCh. 7 - Last year Aleshia identified 15,000 as a...Ch. 7 - Prob. 22CECh. 7 - Prob. 23CECh. 7 - Prob. 24CECh. 7 - Prob. 25CECh. 7 - Belinda was involved in a boating accident in...Ch. 7 - Prob. 27CECh. 7 - Prob. 28CECh. 7 - Prob. 29CECh. 7 - Phillis and Trey are married and file a joint tax...Ch. 7 - Emily, who is single, sustains an NOL of 7,800 in...Ch. 7 - Prob. 32PCh. 7 - Monty loaned his friend Ned 20,000 three years...Ch. 7 - Sally is in the business of purchasing accounts...Ch. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Olaf lives in the state of Minnesota. In 2019, a...Ch. 7 - Prob. 38PCh. 7 - On July 24 of the current year, Sam Smith was...Ch. 7 - Prob. 40PCh. 7 - During 2019, Leisel, a single taxpayer, operates a...Ch. 7 - Prob. 42PCh. 7 - Prob. 43PCh. 7 - Xinran, who is married and files a joint return,...Ch. 7 - During 2019, Rick and his wife, Sara, had the...Ch. 7 - Soong, single and age 32, had the following items...Ch. 7 - Prob. 47PCh. 7 - Prob. 48PCh. 7 - Assume that in addition to the information in...Ch. 7 - Jed, age 55, is married with no children. During...Ch. 7 - Prob. 51CPCh. 7 - Mason Phillips, age 45, and his wife, Ruth, live...Ch. 7 - During 2019, John was the chief executive officer...Ch. 7 - Prob. 2RP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- George and Emily Cosgrove of Athens, Georgia, recently had a fire in their garage that destroyed two of their cars and did considerable damage to the garage and to the outside of their home. After receiving their reimbursements from their homeowner's and automobile insurance policies, the Cosgroves realized that they were severely underinsured. One vehicle was not insured for fire, and the insurance on their dwelling amounted to only 60 percent of its current replacement value. What do you recommend to George and Emily about managing property and liability risk regarding: 1. The relationship between severity and frequency of loss when deciding whether to buy insurance?arrow_forwardThe value of Terrah’s personal residence has declined significantly because of a recent forest fire in the area where she lives. Terrah’s house suffered no actual damage during the fire, but because much of the surrounding area was destroyed, the value of all of the homes in the area declined substantially. Discuss whether Terrah can take a casualty loss for the decline in value of her residence caused by the fire.arrow_forwardReynaldo and Sonya, a married couple, had flood damage in their home due to a dam break near their home in 2019, 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 FMV Just Prior to Damage Original Item Cost (Basis) Antique poster bed $ 6,000 $ 5,000 Pool table 7,000 11,000 Flat-screen TV 700 2,500 Required: Their homeowner's insurance policy had a $10,000 deductible for the personal property, which was deducted from their insurance reimbursement of $12,700, resulting in a net payment of $2,700. Their AGI for 2019 was $50,000. What is the amount of casualty loss that Reynaldo and Sonya can claim on their joint return for 2019?arrow_forward
- In the current year, Brit had a federally declared disaster fire hit her house that damaged a couch and completely destroyed a bed and an antique table. She had no fire insurance. The couch cost $300, the bed $450, and the table $65. Just before the fire, the couch had a fair market value of $70, the bed had a value of $275, and the table had a value of $200. After the fire, the couch was worth $20. Brit's casualty loss before any dollar limitations is А. $815 В. $545 С. $390 D. $525arrow_forwardChristopher's main home was damaged by a tornado, and his county was later deemed a federal disaster area. He incurred $80,000 worth of damage to his home, but $65,000 was reimbursed by his homeowner's insurance. His basis in the home was $175,000 at the time of the tornado. Christopher's employer had a disaster relief fund for its employees. He received $5,000 from the fund and spent the entire amount on repairs to his home. What is Christopher's casualty loss (before the calculation of any limitations)? Group of answer choices $0 $10,000 $15,000 $5,000arrow_forwardWhat Do You Recommend? George and Emily Cosgrove of Athens, Georgia, recently had a fire in their garage that destroyed two of their cars and did considerable damage to the garage and to the outside of their home. After receiving their reimbursements from their homeowner's and automobile insurance policies, the Cosgroves realized that they were severely underinsured. One vehicle was not insured for fire, and the insurance on their dwelling amounted to only 60 percent of its current replacement value. What do you recommend to George and Emily about managing property and liability risk regarding: 1. The risk-management steps they should take to update their insurance coverages?arrow_forward
- What Do You Recommend? George and Emily Cosgrove of Athens, Georgia, recently had a fire in their garage that destroyed two of their cars and did considerable damage to the garage and to the outside of their home. After receiving their reimbursements from their homeowner's and automobile insurance policies, the Cosgroves realized that they were severely underinsured. One vehicle was not insured for fire, and the insurance on their dwelling amounted to only 60 percent of its current replacement value. What do you recommend to George and Emily about managing property and liability risk regarding: 1. The risk-management steps they should take to update their insurance coverages? 2. The relationship between severity and frequency of loss when deciding whether to buy insurance?arrow_forwardBeBe had a tough year! She had two different unfortunate casualties during the year. First, her car was in an accident. Her car had a value of $20,000. Her basis (her cost) had been $30,000. After the accident, the value was reduced to only $10,000. Her insurance company reimbursed her for $3,000 only. Second, she had a separate free-standing storage she on her property, which burned down. The shed had a fair market value of $4,000, and a cost adjusted basis to BeBe of $3,500. Her insurance company reimbursed her $3,000 for her loss. If BeBe's adjusted gross income is $60,000, what is her deductible casualty loss, if any?arrow_forward-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.arrow_forward
- Johnny's personal-use classic Ford Mustang, for which he paid $12,000 seven years ago but now worth $20,000, was completely destroyed in a hurricane, which was declared a federal disaster. Johnny does not carry auto insurance. As a result of the hurricane, Johnny missed a business meeting and lost out on an order from which he would have earned $3,000. In that same hurricane, Johnny lost his stereo equipment worth $1,600 (purchase price $2,500), along with jewelry valued at $4,000 (purchase price $3,000). Johnny's homeowner's policy covered $5,000 of this loss. His adjusted gross income for the year is $80,000. Assuming he can itemize his deductions, calculate his deductible casualty and theft loss. Chacret aarrow_forwardIn early 2019, Cyndey Walters received a $2 million settlement as a result of suffering serious injuries in an accident on a construction site. As a result, she immediately quit her job as a plumber for a construction company and began to search for rundown houses in her neighbour hood that she could buy at a low price. Her objective was to bring her houses up to code (i.e., in accordance with building regulations) and then rent them to individuals who could not afford adequate housing. Cyndey charged just enough rent to cover the expenses of each house. By March 2020, she owned five houses that were rented to five families. She continued working part time as a plumber while she took courses toward a degree in social work. Cyndey came from a large family, many members of which were involved in construction. She called on her family for help when her tenants needed services, and they gave her a family dis- count for their services. In June 2021, she learned that the owner of two…arrow_forwardAt age 65, Carlota’s financial position was better than her health. She had a large balance in an IRA that she wanted to move to a different IRA. Carlota withdrew $100,000 from the IRA and planned to roll over the funds into another IRA. Unfortunately, she died before completing the rollover. Carlota’s son, Andres, discovered what his mother had done a week after her death. Andres was both executor of Carlota’s estate and beneficiary of her IRA. Can Andres, in his role as executor, complete the rollover for his deceased mother by depositing the $100,000 in another IRA within the 60-day rollover period? a. Locate the IRS pronouncement(s) that deals with this situation. State the pronouncement number(s). b. Review the IRS pronouncement(s). Does it raise a need for new information to solve this question? c. Are you able to reach a conclusion about the research question from this IRS pronouncement(s)? If so, what is your conclusion(s)?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT