Chapter 7

Chapter 7 - Chapter 7 On June 2 2009 Freds TV Sales sold...

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Chapter 7 On June 2, 2009, Fred’s TV Sales sold Mark a large HD TV, on account, for $12,000. Fred’s TV Sales uses the accrual method. In 2010, when the balance on the account was $8,000, Mark filed for bankruptcy. Fred was notified that he could expect to receive 60 cents on the dollar of the amount owed to him. In 2011, final settlement was made and Fred received $5,000. How much bad debt loss can Fred deduct and in which years? Answer a. 2009—$12,000. b. 2009—$0; 2010—$8,000. c. 2009—$0; 2010—$3,200; 2011—$0. d. 2010—$4,800. e. None of the above. In 2010, Juan’s home was burglarized. Juan had the following items stolen: Securities worth $15,000. Juan purchased the securities four years ago for $20,000. New tools which Juan had purchased two weeks earlier for $6,000. Juan uses the tools in making repairs at an apartment house that he owns and manages. An antique worth $12,000. Juan inherited the antique (a family keepsake) when the property was worth $9,000. Juan’s homeowner’s policy had a $50,000 deductible clause for thefts. If Juan’s salary for the year is $60,000, determine the amount of his itemized deductions as a result of the theft. Answer a. $3,100. b. $6,000. c. $23,100. d. $23,500. e. None of the above. Jed is an electrician. Jed and his wife are cash 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
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Chapter 7 - Chapter 7 On June 2 2009 Freds TV Sales sold...

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