Joahn’s car, which he uses 100% for personal purposes, was completely destroyed in an accident in...

Joahn’s car, which he uses 100% for personal purposes, was completely destroyed in an accident in 2016. 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. John 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 John’s deductible loss?

Solutions

Expert Solution

As per Income Tax Act 1961

Sec 36 says any expeses used for personal purpose is not allowed as duduction under PGBP.
If any compensation received from Insurance company on capital assets shall be taxable under capital gain. But car is not "capital asset"

Conclusion : Jhon doesn't allow deduction as a loss .

ekkarill92 answered 2 years ago

Next > < Previous

Related Solutions

Norm's car, which he uses 100% for personal purposes, was completely destroyed in an accident in...

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...

Norm’s car, which he uses 100% for personal purposes, was completely destroyed in an accident in...

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...

A person Has a car accident. His injuries are : • Association hearing area destroyed •...

A person Has a car accident. His injuries are : • Association hearing area destroyed • Primary sensitive area, on the face, destroyed • In the legs, the ventral root of the right nerve is completely destroyed • At the level of the T9 vertebra, the spinal cord is completely cut • At the level of the legs, the dorsal root of the right nerve is cut Tell everything that is still possible and impossible to do by this person...

Ignacio was involved in an auto accident in which he was at fault. His own car...

Ignacio was involved in an auto accident in which he was at fault. His own car sustained $3,827 damages and the other vehicle cost $1,709 to repair. Ignacio was not injured, but the driver of the other car required medical treatment costing 34,550 and the passangers injuries totaled $3,944. Ignacio's policy includes 15/30/10 liabilty, $250 deductible collision and $100 deductible comprehensive. How much of the damages must the insurance company pay? a.$ 24,230 b.$ 30,000 c.$ 43,680 d.$ 21,840

Jaime’s home was completely destroyed by flooding in 2016. He purchased the home in 2010 for...

Jaime’s home was completely destroyed by flooding in 2016. He purchased the home in 2010 for $175,000 including $50,000 allocated for the land. a. What is Jaime’s loss (assuming he had no insurance)? b. If Jaime’s adjusted gross income is $80,000, what is his deductible loss? c. Assume Jaime had insurance and received $160,000 in insurance proceeds to rebuild his home. What is his realized gain or loss? d. What is the recognized gain or loss if he elects to...

Jimmy is in a car accident. He can't open his mouth and has been told that...

Jimmy is in a car accident. He can't open his mouth and has been told that he suffers from the following: black eye, broken nose, broken cheek, broken upper jaw, damaged eye socket, and punctured lung. Describe exactly what structures have been affected by his car accident.

During a family vacation, the Densmores were struck by a transfer truck which destroyed their car....

During a family vacation, the Densmores were struck by a transfer truck which destroyed their car. Luckily, the family survived with what seemed like superficial wounds, except for Mrs. Densmore who appeared to suffer from ‘whiplash injury’. As the days passed, Mrs. Densmore began to suffer neuromuscular symptoms. She exhibited a profound tilting of the head to the right side of her body. Other tests by an orthopedic physician indicated partial paralysis of the right sternocleidomastoid muscle. Subsequent x-rays revealed...

Pantanal, Inc., manufactures car seats in a local factory. For costing purposes, it uses a first-in,...

Pantanal, Inc., manufactures car seats in a local factory. For costing purposes, it uses a first-in, first-out (FIFO) process costing system. The factory has three departments: Molding, Assembling, and Finishing. Following is information on the beginning work-in-process inventory in the Assembling Department on August 1: Costs Degree of Completion Work-in-process beginning inventory (9,000 units) Transferred-in from Molding $ 103,000 100 % Direct materials costs 167,000 50 Conversion costs 60,000 50 Work-in-process balance (August 1) $ 330,000 During August, 101,000 units...

Pantanal, Inc., manufactures car seats in a local factory. For costing purposes, it uses a first-in,...

Pantanal, Inc., manufactures car seats in a local factory. For costing purposes, it uses a first-in, first-out (FIFO) process costing system. The factory has three departments: Molding, Assembling, and Finishing. Following is information on the beginning work-in-process inventory in the Assembling Department on August 1: Costs Degree of Completion Work-in-process beginning inventory (11,000 units) Transferred-in from Molding $ 98,000 100 % Direct materials costs 157,000 70 Conversion costs 59,000 50 Work-in-process balance (August 1) $ 314,000 During August, 106,000 units...

Pantanal, Inc., manufactures car seats in a local factory. For costing purposes, it uses a first-in,...

Pantanal, Inc., manufactures car seats in a local factory. For costing purposes, it uses a first-in, first-out (FIFO) process costing system. The factory has three departments: Molding, Assembling, and Finishing. Following is information on the beginning work-in-process inventory in the Assembling Department on August 1: Costs Degree of Completion Work-in-process beginning inventory (11,000 units) Transferred-in from Molding $ 99,000 100 % Direct materials costs 165,200 60 Conversion costs 62,000 40 Work-in-process balance (August 1) $ 326,200 During August, 107,000 units...

Subjects