Calzone Trucking Company is a corporation that is 100% owned by Fred Calzone. Before he incorporated in 2014, Fred had operated the business as a sole proprietorship. The taxable income (loss) of Calzone for 2011 through 2013 is as follows:
2011 2012 2013
Taxable income (loss) $32,000 $(64,000) $18,000
The 2013 taxable income includes a net long-term capital gain of $4,000.
Calzone Trucking's 2014 operating income is $43,400 before considering the following transactions:
A. A hailstorm caused part of the roof of the truck garage to collapse. A truck inside sustained damage from falling debris. The garage had a fair market value of $59,000 before the damage and an adjusted basis of $35,000. Repairs to the roof cost $13,200, of which $9,700 was reimbursed by the insurance company. The truck, which had an adjusted basis of $35,000, had a fair market value of $62,000 before the damage and had a fair market value after the damage of $37,000. Calzone Trucking's insurance company paid $16,600 for the damages to the truck.
B. Another truck was totally destroyed when its brakes failed and it plunged off a cliff. Fortunately, the driver was able to jump from the truck and escaped unharmed. The truck, which had an adjusted basis of $24,000, was worth $30,000 before the accident. Calzone received $13,700 from its insurance company for the destruction of the truck. In addition, the company was cited for failure to properly maintain the truck and paid a $7,250 fine to the state trucking commission.
C. Calzone sold equipment that had become obsolete for $10,800. The equipment had cost $28,000, and depreciation of $15,400 had been taken on it before the sale.
D. Fred's son wanted to start a delivery business. To help his son, Fred directed Calzone's to sell him a used truck for $8,000. The truck had a fair market value of $15,200 and an adjusted basis of $10,100 at the time of the sale.
E. Calzone sold stock it owned in two other companies. The shares had both been purchased in 2011.
Stock name Cost Selling price
Retro Corporation $21,400 $36,200
Tread Corporation $62,100 $31,700
Calculate the 2014 taxable income for Calzone Trucking Company. Indicate the amount and the effect of any carryforwards or carrybacks on Calzone Trucking's current, past, or future income. Show and label all of your work.