ssq7 - Chapter 7 Self-Study Questions 47. Gordon is the...

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Chapter 7 Self-Study Questions 47. Gordon is the sole proprietor of Fashion Flowers & Florals (FFF). During the current year, one of FFF's delivery vans is involved in an automobile accident. The van has a basis of $6,000. What is FFF's allowable casualty loss deduction under each of the following situations? a. A comparable van sells for $4,000. FFF's van was totally destroyed in the accident. FFF's insurance pays $2,200 on the casualty. The loss on business property totally destroyed is the property's basis. The $6,000 basis is reduced by the $2,200 insurance reimbursement for a deductible loss of $3,800. b. A comparable van sells for $8,400. FFF's van was totally destroyed in the accident. FFF's insurance pays $6,400 on the casualty. The $6,000 basis is the measure of loss. Because the $6,400 of insurance proceeds exceeds the $6,000 basis, FFF has a gain of $400 on the casualty.
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27. Which of the following are passive activities? a. Marvin is a limited partner in the Jayhawk Beach Club and owns a 20% interest in the partnership. The partnership's sole asset is a resort hotel. A limited partnership interest is always considered to be a passive activity. Although a hotel is listed as an exception to the passive activity rules because the activity provides significant services, Marvin can only meet this exception if he materially participates in the hotel's operations. As a limited partner, Marvin has no involvement in managing the resort and does not meet the material participation test. b.
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This note was uploaded on 04/18/2008 for the course ACCT 3013 taught by Professor Murphy during the Spring '08 term at Oklahoma State.

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ssq7 - Chapter 7 Self-Study Questions 47. Gordon is the...

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