Question

1- In the current year, Wilson Enterprises, a calendar year taxpayer, suffers a casualty loss of $190,000. The casualty was attributable to a Federally declared disaster. How much of the casualty loss will be deductible by Wilson under the following circumstances?

a. Wilson is an individual proprietor and has AGI of $475,000. The casualty loss was a personal loss, and the insurance recovered was $104,500 before any limitations.

Wilson can claim a casualty loss as an itemized deduction of $.

b. Assume Wilson is a corporation, and the insurance recovered was $104,500 before any limitations.

Wilson can deduct $

2- Goose Corporation, a C corporation, incurs a net capital loss of $43,100 for 2019. It also has ordinary income of $34,480 in 2019. Goose had net capital gains of $8,620 in 2015 and $17,240 in 2018.

a. Determine the amount, if any, of the net capital loss of $43,100 that is deductible in 2019.

b. Determine the amount, if any, of the net capital loss of $43,100 that is carried forward to 2020.

Answer 1

Answer:

1.

a)Statement showing calculation of casualty loss:

Descriptive	Amount
Loss	$ 1,90,000
Insurance recovery	$1,04,500
Loss after insurance reimbursement ($ 1,90,000 - $1,04,500 )	$ 85,500
Less :
Single event deduction	$ 100
Loss after $100 rule($ 85,500 - $ 100)	$ 85,400
Less :
$475,000(AGI) * 10%	$ 47,500
Casualty loss deduction ($ 85,400 -  $ 47,500)	$ 37,900

b)

Casualty loss is an individual loss and wilson is an organization .Hence casualty loss accessible to wilson partnership is $0.

2.

a)

The sum deductible is $0 that is deductible in 2019.

Corporate taxpayers are not allowed to deduct any net capital misfortunes or losses against ordinary income as people are permitted to.Capital losses can be utilized distinctly as a counterbalance against capital increases or capital gains. Therefore, if the present capital increases are inadequate to counterbalance the present capital misfortunes, the organization has no present reasoning for the abundance capital loss.Because Goose Corporation has no present capital gains to balance the capital loss, none of the $43,100 can be deducted in 2019 .

b)

The sum that is carried forward is $25,860 ($43,100 - $17,240). $8,620 isn't permitted as finding as the present year loss moves 3 years for carryback.

'or then again corporate citizens, any overabundance net capital misfortunes might be use to balance past or future capital additions. However,corporations may just convey back net capital misfortunes to three going before years, applying them first to the most punctual year.Carry advances are took into account a time of five years from the time of the shortfall. When conveyed back or advance, a long haul capital misfortune is treated as a transient capital misfortune Goose Corporation is required to convey back the capital loss to three going before years. Of the $43,100 net capital loss,$17,240 is conveyed back to 2018 and deductible against the $17,240 net capital increase of that year. The remaining $25,860 ($43,100 - $17,240) of the net capital deficit is carried forward to 2020.