Answered

Welcome to Westonci.ca, the Q&A platform where your questions are met with detailed answers from experienced experts. Get quick and reliable answers to your questions from a dedicated community of professionals on our platform. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently.

In the current year, Wilson Enterprises, a calendar year taxpayer, suffers a casualty loss of $90,000. The casualty was attributable to a Federally declared disaster. How much of the casualty loss will be deductible by Wilson under the following circumstances?
a. Wilson is an individual proprietor and has AGI of $225,000. The casualty loss was a personal loss, and the insurance recovered was $50,000.b. Wilson is a corporation, and the insurance recovered was $50,000.

Sagot :

abiolataiwo2015

Answer:

A. $17,400

B. $40,000

Explanation:

A. Calculation to determine How much of the casualty loss will be deductible by Wilson

Using this formula

Itemized deduction = Casualty loss - Insurance recovery -$100 - 10% of AGI (ADJUSTER GROSS INCOME)

Let plug in the formula

Itemized deduction= $90,000 - $50,000 - $100- $225000*10%

Itemized deduction=$90,000 - $50,000 - $100-$22,500

Itemized deduction=$ 17,400

Therefore the amount of casualty loss that will be deductible by Wilson is $17,400

b. Calculation to determine How much of the casualty loss will be deductible by Wilson if Wilson is a corporation, and the insurance recovered was $50,000

Using this formula

Deduction if it is a C Corp = Casualty loss - Insurance recovery

Let plug in the formula

Deduction if it is a C Corp=$90,000 -$50,000

Deduction if it is a C Corp=$40,000

Therefore the amount of the casualty loss that will be deductible by Wilson if Wilson is a corporation, and the insurance recovered was $50,000 is $40,000

We hope our answers were useful. Return anytime for more information and answers to any other questions you have. We appreciate your time. Please come back anytime for the latest information and answers to your questions. Stay curious and keep coming back to Westonci.ca for answers to all your burning questions.