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Two Accounting Problems - Passive Losses and Personal-Use Casualty Losses




Question;1);Passive;Losses. In the current year Clay reports income and losses from the following;activities;Activity X $28,000;Activity Y (10,000);Activity Z (20,000);Salary 100,000;Activities;X, Y, and Z are all passive with respect to Clay. Activity Z has $40,000 in;passive losses which are carried over from the prior year. In the current year;Clay sells activity Z for a taxable gain of $30,000.;a.;What;is the amount of loss that Clay may deduct and what is the amount that must be;carried over in the current year?b.;Based;solely on the amounts above, compute Clay?s AGI for the current year.1) Personal-Use Casualty Losses.;In the current year Ned completely;destroys his personal automobile (purchased two years earlier for $28,000) in a;traffic accident. Fortunately none of the occupants are injured. The FMV of the;car before the accident is $18,000, after the accident it is worthless. Ned;receives a $14,000 settlement from the insurance company. Later in the same;year his house is burglarized and several antiques are stolen. The antiques;were purchased a number of years earlier for $8,000. Their value at the time of;the theft is estimated at $12,000. They are not insured. Ned?s AGI for the;current year is $60,000. What is the amount of Ned?s deductible casualty loss;in the current year, assuming the thefts are discovered in the same year?="msolistparagraph">="msolistparagraph">


Paper#40699 | Written in 18-Jul-2015

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