Mr. Smith constructed a building at a cost of $80,000 on land that he leases. He

Q: Mr. Smith constructed a building at a cost of $80,000 on land that he leases. He

Total loss : cost of Building =$80000 Less: depreciation = $4800 Net Book Value = $75200 Less: FMV of Building = $64000 Less:Insurance Reimbursement = $8000 Total loss -$ 3200 Business loss : 50% * ($3200) = -$1600 Personal loss : 50% * ($3200) = -$1600 Note: Since Mr. Smith uses half of the Building for business purpose and half of it for living ,loss ratio will be 1:1 for business and personal

ID: 2713262 • Letter: M

Question

Mr. Smith constructed a building at a cost of $80,000 on land that he leases. He uses half of the building for business purposes and lives in the other half. In the current year, a flood damaged the entire building. Mr. Smith's records reflect the following information: Cost of building $80,000 Depreciation properly deducted 4,800 FMV before flood 76,000 FMB after flood 64,000 Insurance reimbursement 8,000 Mr. Smith's AGI for the current year 50,000 Calculate the Business Loss amount and personal loss amount.

Explanation / Answer

Total loss :

cost of Building =$80000

Less: depreciation = $4800

Net Book Value = $75200

Less: FMV of Building = $64000

Less:Insurance Reimbursement = $8000

Total loss -$ 3200

Business loss : 50% * ($3200) = -$1600

Personal loss : 50% * ($3200) = -$1600

Note: Since Mr. Smith uses half of the Building for business purpose and half of it for living ,loss ratio will be 1:1 for business and personal

Navigate

Mr. Smith borrows $8,000 from a bank that charges interest at 6% compounded mont

Mr. Smith decides to feed his pet Doberman pinscher a combination of two dog foo

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.

Mr. Smith constructed a building at a cost of $80,000 on land that he leases. He

Question

Explanation / Answer

Related Questions

Navigate