IN THE YEAR OF TOTAL WORTHLESSNESS
SHORT TERM CAPITAL LOSS
When can a bad debt deduction be taken for a nonbusiness debt?
How is a nonbusiness bad debt classified?
NO BAD
GAIN
12,000
Bob owns a collection agency. He purchases uncollected accounts receivable from other businesses at 60% of their face value and then attempts to collect these accounts. During the current year, Bob collected $60,000 on an account with a face value of $80,
NOT AN ISSUE
YES, AN ISSUE
YES, AN ISSUE
YES, AN ISSUE
Many years ago, Jack purchased 400 shares of Canary stock. During the current year, the stock became worthless. It was determined that the company "went under" because several corporate officers embezzled a large amount of company funds.
Identify which of
NO
IRS
NONSUDDEN EVENTS DO NOT
Jim discovers that his residence has extensive termite damage. May he take a deduction for the damage to his residence?
____ , because the current position of the____ is that termite damage is not deductible as a casualty loss. Generally,____ qualify as c
NO
DOES NOT
The value of Mary's personal residence has declined significantly because of a recent forest fire in the area where she lives. Mary's house suffered no actual damage during the fire, but because much of the surrounding area was destroyed, the value of all
ADJUSTED BASIS
LESSER
ADJUSTED BASIS
FAIR MARKET VALUE
Answer the following regarding the measurement rule for the theft of property used in a transaction entered into for profit.
If business property or property held for the production of income is completely destroyed, the loss is equal to the____of the pro
6,000,000
Determine the treatment of a loss on rental property under the following facts:
Basis $650,000
FMV before the loss 800,000
FMV after the loss 200,000
The amount of the loss is $____ .
A.) A MISCELLANEOUS ITEMIZED DEDUCTION BUT NOT SUBJECT TO 2% OF AGI FLOOR
A.1.) ADJUSTED BASIS
B.) A CAUSALITY AND THEFT LOSS THAT IS SUBJECT TO THE $100 PER EVENT AND 10% OF AGI FLOOR
B.1.) LESSER OF THE DECLINE IN FAIR MARKET VALUE OR THE ADJUSTED BASIS
Hazel sustained a loss on the theft of a painting. She had paid $20,000 for the painting, but it was worth $40,000 at the time of the theft.
a. If the painting is treated as investment property, the loss is____ Before adjustments (if any), the loss is lim
EXEMPT
AMORTIZE
AMORTIZE
Under what circumstances would a company elect to amortize research and experimental expenditures rather than use the expense method?
� When the company wants to create a net operating loss carryover.
� When the company does not have sufficient income to
LOSSES
PROFIT
Net Operating Loss - Itemized Deductions (LO. 7)
Complete the statement below regarding NOLs and itemized deductions.
Itemized deductions for____incurred in a transaction entered into for____ can create an NOL.