Question

This year Amy purchased $2,200 of equipment for use in her business. However, the machine was...

This year Amy purchased $2,200 of equipment for use in her business. However, the machine was damaged in a traffic accident while Amy was transporting the equipment to her business. Note that because Amy did not place the equipment into service during the year, she does not claim any depreciation expense for the equipment.

a. After the accident, Amy had the choice of repairing the equipment for $2,580 or selling the equipment to a junk shop for $410. Amy sold the equipment. What amount can Amy deduct for the loss of the equipment?

b. After the accident, Amy repaired the equipment for $1,410. What amount can Amy deduct for the loss of the equipment?

c. After the accident, Amy could not replace the equipment so she had the equipment repaired for $2,800. What amount can Amy deduct for the loss of the equipment?

Homework Answers

Answer #1

a.

For the complete destruction of a business asset, Amy can claim a casualty loss deduction for the tax basis of the machine less any recovery. Hence, Amy can claim a casualty deduction for ($2,200 — $410) =$1,790

Deductible Amount: $1,790

b.

For partial destruction of a business asset, Amy can claim a casualty loss deduction for the lesser of the economic loss (the cost of repair) or the tax basis of the machine. In this case Amy can deduct $1,410

Deductible Amount: $1,410

c.

For partial destruction of a business asset, Amy can claim a casualty loss deduction for the lesser of the economic loss (the cost of repair) or the tax basis of the machine. In this case Amy can deduct $2,200

Deductible Amount: $2,200

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
This year Amy purchased $2,780 of equipment for use in her business. However, the machine was...
This year Amy purchased $2,780 of equipment for use in her business. However, the machine was damaged in a traffic accident while Amy was transporting the equipment to her business. Note that because Amy did not place the equipment into service during the year, she does not claim any depreciation or cost recovery expense for the equipment. a. After the accident, Amy had the choice of repairing the equipment for $2,150 or selling the equipment to a junk shop for...
This year Amy purchased $3,450 of equipment for use in her business. However, the machine was...
This year Amy purchased $3,450 of equipment for use in her business. However, the machine was damaged in a traffic accident while Amy was transporting the equipment to her business. Note that because Amy did not place the equipment into service during the year, she does not claim any depreciation expense for the equipment. a. After the accident, Amy had the choice of repairing the equipment for $2,440 or selling the equipment to a junk shop for $680. Amy sold...
Ryan is self-employed. This year Ryan used his personal auto for several long business trips. Ryan...
Ryan is self-employed. This year Ryan used his personal auto for several long business trips. Ryan paid $2,330 for gasoline on these trips. His depreciation on the car if he was using it fully for business purposes would be $3,300. During the year, he drove his car a total of 14,300 miles (a combination of business and personal travel). (Round your final answers to the nearest whole dollar amount.) a. Ryan can provide written documentation of the business purpose for...
Shannon purchased some used equipment for her business in November of last year. She originally purchased...
Shannon purchased some used equipment for her business in November of last year. She originally purchased the equipment for 17,298 but can now sell it for 19,381. She did not elect Bonus depreciation but did elect 5,000 of 179 depreciation. Calculate Shannon's depreciation for her equipment this year.
Lanyard purchased office equipment for use in his business (7 year property). He paid 100,000 for...
Lanyard purchased office equipment for use in his business (7 year property). He paid 100,000 for the equipment on july 1, 2017. Lanyard did not purchase any other property during the year. for 2017, his business ha a net income of 350,000, before depreciation and before considering the election to expense. A) what is the maximum amount that lanyard can deduct in 2017 under the election to expense? B) What is the total depreciation (regular depreciation under the amount allowed...
During the current year, Marlene, Nancy and Olive formed a new S Corporation. Solely in exchange...
During the current year, Marlene, Nancy and Olive formed a new S Corporation. Solely in exchange for stock, Marlene and Nancy contributed appreciated property, while Olive contributed services. The exchanges of Marlene and Nancy will be nontaxable if: Olive receives 30% of the stock Olive receives 80% of the stock Olive receives 15% of the stock Marlene and Nancy together receive 50% of the stock In June of 2018, Alice acquired her only machine for $30,000 to use in her...
Ben and Chris combined their love of hockey with a business venture. They purchased a small...
Ben and Chris combined their love of hockey with a business venture. They purchased a small portable cart and began selling hockey memorabilia outside of the hometown hockey arena. Their first year went well, but this past year has been a real struggle. Due to poor economic conditions including a loss of jobs, ticket sales at the arena are down, which has significantly hurt their sales as well. As a recent business school graduate, you explain to Ben and Chris:...
Read and review this case scenario below and answer: From the obvious idea of getting more...
Read and review this case scenario below and answer: From the obvious idea of getting more insurance, how could Lucci have managed risks better? Be sure to address the idea that Lucci had lost money during 9/11 which was also an unexpected occurrence The Automobile Film Club of America has played a supporting role in New York-based film and television productions since 1993. It owns a fleet of vehicles — including police cruisers, taxis and vintage automobiles — that have...
About John Daniels Chemicals Inc. This business case is about John Daniels Chemicals Inc., which is...
About John Daniels Chemicals Inc. This business case is about John Daniels Chemicals Inc., which is one the most respected and elite chemical research organization in the industry, operating since 1991, with the headquarters in Tanzania, Africa. Organizational Structure and Culture at John Daniels Chemicals Inc. Organizational culture in John Daniels Chemicals Inc. is an open and less rigid one, unlike the other usual corporations in the market. The scientists selected to work in John Daniels Chemicals Inc. are top...
Discussed negative messages and how they are meant to deliver bad news to an audience. Business...
Discussed negative messages and how they are meant to deliver bad news to an audience. Business often send such letters to customers or clients to refuse or deny a request. This task often proves to be especially challenging when the refusal is because the customer was at fault. For this assignment, analyze the letter below, to a customer trying to make a warranty claim for damage to her cellphone which she caused, and follow the instructions. What is your initial...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT