30 May ACC 4010 Week 4 Assignment 2 NEW
Tax Deductions for and from AGI
Hank was transferred from Phoenix to North Dakota on March 1 of the current year. He immediately put his home in Phoenix up for rent. The home was rented May 1 to November 30 and was vacant during the month of December. It was rented again on January 1 for six months. What expenses, if any, can Hank deduct on his return? Which deductions are for AGI, and which ones are from AGI?
Tax Deductions on Stolen Items:
During 2012, someone broke into Jacob’s personal residence and took the following items:
|
Asset |
Adjusted Basis |
Fair Market Value (FMV) before |
Fair Market Value (FMV) after |
Insurance Recovery |
|
Business computer |
$12,000 |
$10,000 |
$ –0– |
$ 7,000 |
|
Bearer bonds |
30,000 |
25,000 |
–0– |
–0– |
|
Silverware |
7,000 |
20,000 |
–0– |
18,000 |
|
Cash |
8,000 |
8,000 |
–0– |
–0– |
Jacob is an employee and used the computer 100% of the time in his employment. Although his homeowner’s insurance policy paid Jacob $7,000 for the stolen computer, Jacob’s employer did not reimburse Jacob for any of the remainder of his loss. Jacob’s AGI for the year, before considering any of the above items, is $50,000. Determine the total deduction for the stolen items on Jacob’s 2012 tax return.
Cost Recovery:
On August 2, 2012, Wendy purchased a new office building for $3.7 million. On October 1, 2012, she began to rent out office space in the building. On July 15, 2016, Wendy sold the office building.
- Determine Wendy’s cost recovery for 2012.
- Determine Wendy’s cost recovery for 2016.
Support your responses with examples.
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