ACC 307 help A Guide to career/Snaptutorial ACC 307 help A Guide to career/Snaptutorial | Page 12

with the $20,000 due at the end of ten years. John always made the
interest payments until last year. During the current year, John
notified his father that he was bankrupt and would not be able to
repay the $20,000 or the accrued interest of $1,800. Tom is an
accrual basis taxpayer whose only income is salary and interest
income. The proper treatment for the nonpayment of the note is
7. Jed is an electrician. Jed and his wife are accrual basis taxpayers
and file a joint return. Jed wired a new house for Alison and billed
her $15,000. Alison paid Jed $10,000 and refused to pay the
remainder of the bill, claiming the fee to be exorbitant. Jed took
Alison to Small Claims Court for the unpaid amount and was
awarded a $2,000 judgement. Jed was able to collect the judgement
but not the remainder of the bill from Alison. What amount of loss
may Jed deduct in the current year?
8. Norm’s car, which he uses 100% for personal purposes, was
completely destroyed in an accident in 2013. 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 considering the loss). What is Norm’s deductible
loss?
9. Which of the following events would produce a deductible loss?
10. Ivory, Inc., has taxable income of $600,000 and qualified
production activities income (QPAI) of $700,000 in 2013. Ivory’s
domestic production activities deduction is
11. Bhaskar purchased a new factory building on September 10,
2013, for $3,700,000. Five hundred thousand of the purchase price
was allocated to the land. He elected the alternative depreciation
system (ADS). Determine the cost recovery deduction for 2014.
12. Howard’s business is raising and harvesting peaches. On March
10, 2013, Howard purchased 10,000 new peach trees at a cost of
$60,000. Howard does not elect to expense assets under § 179. If
eligible, Howard takes additional first-year depreciation. Determine
the cost recovery deduction for 2013.