Question

Julia had a deductible capuary lon of $10.000 in Year 1. Ner taxable income for Yer 1 w S55,000. In Year 2, Martha was reimburned $7,000 for the carually loss How much incone mus Julia report in Year 2 for the reimbunement? a$-0 b53,000 $7,000 d $10,000 Marshaa mamied and owns her own basisss Sbe uses the canh recelp and diabrnma methed r purpa. During he a yr her joome, epee, nd oher hem w follew 12. Oros receip Cost of goods sold General penes Uncellectible aceounts receivables $40,000 $24,000 514,000 56,000 What is Marsha's eurreni year bad debt expense deduction for tax parpoeps? a $-0 b. $2.000 $3,000 d s6,000 13. Manha is mamied and owns her own business She uses the acerual method for ta purposes. During the eurrent yur her incame, expenaes, and other items were as follows: Gro receipts Cost of goods sold Oenel penses Uncollectible accounta receivable $40,000 524,000 $14,000 $6,000 What is Marsha's current yer bad debt expense deduetion for tax purposs? $-0 b. $2,000 53,000 . John files a return as a single taxpayer. In 2018, he had the following items: Salary of $40,000. Loss of $65,000 on the sale of§ 1244 stock acquired two years ago. Interest income of $6,000. Determine John's AGI for 2018. a. ($5,000). b. $0. c. $45,000. d. $51,000. e. None of the above. 70. Norm's car, which he uses 100% for personal purposes, was completely destroyed in an accident in 2018. The car's adjusted basis at the time of the accident was $13,000. Its fair market value was $10,000. The car was covered by a $2.000 deductible insurance policy. Norm did not file a claim against the insurance policy because of a fear that reporting the accident would result in a substantial increase in his insurance rates. His adjusted gross income was $14,000 (before considering the loss). What is Norm's deductible loss?

Please explain all answers. I missed one class for the whole chapter and have a test today. Thank you in advance.

Answer 1

ANSWER - c $7000

Julie had deductible causality loss of $10000 and reimbursement received for the same was $7000. Therefore the deductible loss will be accounted for only $3000. It implies that the income reported in year 2 for the reimbursement will be $7000.