Question

Derrick owns a farm in eastern North Carolina. A hurricane hit the area and destroyed a farm building and some farm equipment and damaged a barn FMV Damage 55,800 Adjusted before FMV after Insurance Item Basis Building97,100 $129,700 $ Equipment Barn Damage Proceeds 0 $64,500 24,400 34,800 82,300 118,500 169,500 118,500 Due to the extensive damage throughout the area, the President of the United States declared all areas affected by the hurricane as a disaster area. Derrick, who files a joint return with his wife, had $51,300 of taxable income last year. Their taxable income for the current year is $168,900, excluding the loss from the hurricane a-1. Calculate the amount of the loss deductible by Derrick and his wife a-2. What amount of loss should be adjusted against current and last year? a- Loss Amount a Last year 2 Current year

Answer 1

As per HOMEWORKLIB POLICY, please post one question at a time. Here answering the first question below:

a-1	Loss Amount	=	$   1,06,700
	Workings:
		Insurance Proceeds	Basis / FMP
		(a)	(b)	(a) - (b)
	Building	$                        64,500	$      97,100	$     -32,600
	Equipment	$                        24,400	$      82,300	$     -57,900
	Barn ($169500 - $118500)	$                        34,800	$      51,000	$     -16,200
	Loss Amount			$ -1,06,700
a-2	Last Year	=	$      51,300
	Current Year ($106700 - $51300)	=	$      55,400