18 . LO . 4 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 . Evaluate the tax consequences of treating the painting as investment property or as personal use property .
32 . LO . 1 Several years ago , John Johnson , who is in the lending business , loaned Sara $ 30,000 to purchase an automobile to be used for personal purposes . In August of the current year , Sara filed for bankruptcy , and John was notified that he could not expect to receive more than $ 4,000 . As of the end of the current year , John has received $ 1,000 . John has contacted you about the possibility of taking a bad debt deduction for the current year . Write a letter to John that contains your advice as to whether he can claim a bad debt deduction for the current year . Also prepare a memo for the tax files . John ’ s address is100 Tyler Lane , Erie , PA 16563
47 . LO . 7 Sam , age 45 , is single . For 2014 , he has the following items :
Business income $ 70,000
Business expenses 75,000
Alimony paid 12,000
Interest income 3,000
Itemized deductions 8,000
a . Determine Sam ’ s taxable income for 2014 .
b . Determine Sam ’ s NOL for 2014 .