Question

Gabriela and Johnny are married and filed a joint tax return. They had the following items for 2018:

Salary	$103,000
Loss in sale of § 1244 small business stock acquired 3 years ago	(110,000)
Stock acquired 2 years ago became worthless during the year	(10,000)
Long-term capital gain	75,000
Non-business bad debt	(9000)

Gabriela's car was completely destroyed in a hurricane, which had been declared a federal disaster area. At the time of the hurricane, the car had a fair market value of $30,000 and an adjusted basis of $40,000. She used the car 100% of the time for personal use. She received an insurance recovery of $25,000.

1. Provide a detailed calculation of the couple's AGI.

Your Answer must:

(a) explain the rule for § 1244 small business stock and how it applies to the facts;

(b) show a detailed netting capital item;

(c) explains the rule for worthless stock;

(d) explains the rule for the tax treatment of nonbusiness bad debts.

2.(a) What is the rule for calculating the amount of the casualty loss?

(b) Apply the rule to the facts and show a detailed calculation of the loss.

(c) Which schedule does the casualty loss total appear on?

Answer 1

1.Calculation shirank and claudia's balanced gross salary for 2017 shirank and claudia are MFL-Married Felling mutually $salary 183,000 Notes.

Less Long term capital misfortune (common misfortune under segment 1244)

area 1244 allowances misfortune discounted of little business as a typical misfortune, $50,000 for individual and $100,000 for wedded felling together.

($110,000-100,000)- $10,000

Long haul capital addition $25,000

Less:- loaded obtained 2years prior wound up useless amid the year (long haul capital misfortune)- $10,000.

Net long haul capital increase $15,000 Mr and Mrs shivank enough capital addition to deduct the capital deficit.

FMV($30,000-$21,000 protection guarantee)- $9,000 according to 1Rs, cash repaid for insurance agency or expected to get should be deducted from the loss misfortune for deciding absolute misfortune from setback, consequently all out misfortune on vehicle is=$9,000 (FMV of vehicle $30,000-protection recuperation $21,000)

Net capital deficit $4,000

Balanced gross salary $179,000

Note:- Non business awful obligation according to IRS non business obligation are not permitted as derivation in ascertaining AGJ, anyway it has arrangement that if the individual calming such obligation demonstrates the evidence of endeavors they made gather the obligation then such obligation are permitted as conclusion in AGI, in the year it is considered as terrible obligations.

Note2:- Assuming auto collision isn't caused because of shivank's carelessness are botch, thus it is treated as startling or abrupt harm to the property and not characterized under dynamic crumbling.

2)Any casuality misfortune caused because of harm or loss of property from abrupt, unforeseen or uncommon occasions like floods, seismic tremor ,sea tempest and so forth. This rejects the mileage and dynamic weakening.

The casuality deficit can be deducted net of any rescue esteem and protection reimbursment or recuperation or expected to received,such casuality misfortunes are by and large permitted to deduct in year if such occasion occured