Sally is in the service of purchasing accounts receivable. Critical year, Sally purchase an accounts receivable with a challenge value that $80,000 because that $60,000. During the present year, Sally resolved the account, receiving $65,000. Identify the maximum quantity of the negative debt deduction for Sally for the current year.

You are watching: Mable and jack file a joint return. for the current year, they had the following items:

Sally has no poor debt deduction. Sally has income of $5,000 ($65,000 − $60,000) due to the fact that she collected much more than she basis in the receivable.
Mable and Jack record a share return. For the present year, they had actually the complying with items:Salaries ($120,000)Loss on sale of (law - 1244) stock gained two years ago ($105,000)Gain on sale of (law - 1244) stock gained six months earlier ($20,000)Nonbusiness negative debt ($19,000)Determine their AGI because that the existing year.
Salary $120,000 § 1244 plain loss (limit the $100,000) (100,000) Short-term resources gain on § 1244 stock $ 20,000 Short-term resources loss (nonbusiness negative debt) (19,000) network short-term resources gain $ 1,000 net long-term resources loss (remaining § 1244 loss) (5,000) Net resources loss (limited come $3,000; $1,000 LTCL carryover) (3,000) readjusted gross earnings $ 17,000
Olaf lives in the state of Minnesota. A tornado fight the area and damaged his home and also automobile. Applicable details as follows:Item residence AutoAdjusted communication $350,000 $60,000FMV before 500,000 40,000FMV after 100,000 10,000Insurance Proceeds 280,000 20,000Because of the extensive damage caused by the tornado, the president designated the area a catastrophe area.Olaf and also his wife, Anna, always paper a share return. Their 2015 tax return mirrors AGI the $180,000 and taxable income of $140,000. In 2016, your return shows AGI the $300,000 and taxable revenue (exclusive that the casualty loss deduction) that $215,000. Determine the amount of Olaf and also Anna"s loss and the year in i beg your pardon they have to take the loss.
The lot of the loss before the 10%-of-AGI limitation is computed together follows:Home ($350,000 − $280,000) $70,000Auto ($30,000 − $20,000) 10,000 complete loss $80,000 Less: $100 (100)Loss before 10% of AGI $79,900 because the President asserted the area a catastrophe area, Olaf and also Anna could insurance claim the loss on critical year"s return (2015) or top top the existing year"s return (2016).Amount of lose on last year"s return: lose $ 79,900 Less: 10% the AGI (10% $180,000) (18,000) total loss $ 61,900 quantity of loss on present year"s return: lose $ 79,900 Less: 10% of AGI (10% $300,000) (30,000) full loss $ 49,900 If Olaf and Anna apply the loss to 2015, the benefit of the loss will be in ~ a price of 25% due to the fact that taxable income will it is in $78,100 ($140,000 − $61,900) and also the ns falls completely within the 25% taxes bracket. If the lose is used to 2016, the benefit will be in ~ a rate of 28% because taxable earnings will it is in $165,100 ($215,000 − $49,900) and also the ns falls totally within the 28% taxes bracket. The taxation savings will certainly be $15,475 (25% $61,900) if the ns is take away in 2015 and also $13,972 (28% $49,900) if the lose is taken in 2016. Therefore, Olaf and also Anna should encompass the loss on their 2015 return, because the taxation savings is $1,503 ($15,475 − $13,972) greater.
On July 24 of the current year, Sam smith was associated in an accident with his company use automobile. Sam had actually purchased the auto for $30,000. The car had a fair sector value the $20,000 prior to the accident and also $8,000 immediately after the accident. Sam has actually taken $20,000 of depreciation ~ above the car. The automobile is insured because that the fair market value of any loss. Due to the fact that of Sam"s history, that is afraid that if the submits a claim, his policy will it is in canceled. Therefore, the is considering not filing a claim. Sam believes the the tax loss extinguish will assist mitigate the lose of the insurance money reimbursement. Sam"s current marginal tax rate is 35%. Compose a letter to exact same that has your advice through respect to the tax and also cash-flow results of filing versus no filing a insurance claim for the insurance money reimbursement because that the damages to his car. Additionally prepare a memo for the taxation files. Sam"s address is 450 Colonel"s Way, Warrensburg, MO 64093.
Nell, solitary and period 38, had actually the following income and also expense items in 2016:Nonbusiness bad debt $6,000Business negative debt 2,000Nonbusiness long-term resources gain 4,000Nonbusiness short-term funding loss 3,000Salary 50,000Interest revenue 3,000Determine Nell"s AGI for 2016.
Salary $50,000 Interest income 3,000 Business negative debt (2,000) Nonbusiness negative debt (short-term capital loss) ($6,000) Short-term resources loss (3,000) total short-term resources loss ($9,000) Long-term capital gain 4,000 net short-term resources loss ($5,000) funding loss border (3,000) changed gross income $48,000
Assume that in addition to the info in trouble 42, Nell had actually the adhering to items in 2016:Personal casualty acquire on asset hosted for four months ($10,000)Personal casualty loss on one asset held for two years ($1,000)Determine Nell"s AGI because that 2016.
Salary $50,000 Interest earnings 3,000 Business poor debt (2,000) Nonbusiness bad debt ($ 6,000)Short-term resources loss (3,000) complete short-term resources loss ($ 9,000)Short-term resources gain* 10,000 net short-term funding gain 1,000 Long-term capital gain $ 4,000 Long-term capital loss* (1,000)Net long-term resources gain 3,000Adjusted gross income $55,000*Personal casualty profit exceed personal casualty accident ($10,000 − $1,000 = $9,000); therefore, all personal casualty items are treated as funding gains and also losses.

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Barbara, a calendar year taxpayer, owns and operates a agency that manufactures toys. For 2016, she has actually modified AGI of $500,000 and QPAI that $550,000. Skip the W-2 fairy limitation, calculation Barbara"s DPAD.


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