1. Sam's Sports Training, a cash-method taxpayer, provides $20,000 worth of fitness training to the Sacramento Republic Soccer Club on credit in 2016. In 2017, the Sacramento Republic Soccer Club dissolved its business operations before paying Sam's any of the $20,000. What amount can Sam's deduct for bad debt in 2017?
2. Green Apron, a C Corporation, owned food processing equipment (adjusted basis of $50,000; FMV before the fire was $70,000) that was used exclusively in the company's meal delivery business. The equipment was completely destroyed in a fire in 2016 (FMV after fire = $0), and Green Apron did not receive any money from insurance. What is the amount of Green Apron's casualty loss deduction?
3. In 2016, Zack's motorcycle (AB of $21,000; FMV of $20,000) was stolen out of his garage. Also in 2016, Zack's boat (AB of $30,000; FMV of $33,000) was completely destroyed by a fire. Zack filed an insurance claim for each of the casualty losses, but both claims were denied in 2016. Zack's AGI for 2016 was $100,000. What is the amount of Zack's casualty loss deduction (after applying the appropriate reductions)?
Note: it may be helpful to use Form 4684, Section A to calculate the amount of the deductible casualty loss.
If you use the Form 4684, each casualty event will require a separate Form 4684 for Lines 1 - 12, and then both Form 4684s should be combined on one form for Lines 13 - 18. Form 4684 is available in the Homework folder.
4. Frank's house was destroyed in the Clayton Fire in August 2016. The federal government declared a disaster area as a result of the Clayton Fire. In what year can Frank deduct the casualty losses associated with the destruction of his home?
5. Craig's Cars, a car dealership, has taxable income and net operating losses as follows:
Tax Year Taxable Income/NOL
2012 $30,000
2013 $45,000
2014 $80,000
2015 ($100,000)
2016 $500,000
Craig's Cars does not make an election regarding NOLs (i.e. Craig's Cars will use the default carryover provisions). What will Craig's Cars 2014 taxable income be after application of the NOL?
6. In 2014, Kirk invested $50,000 in a partnership in which he materially participates (not a passive activity). Kirk's share of the partnership's deductible losses for 2014 was $20,000. Kirk's share of the partnership's deductible losses for 2015 was $35,000. What amount can Kirk deduct in 2015 for the partnership losses?
7. In 2016, Devin invested $200,000 as a limited partner in a XYZ Limited Partnership (passive activity). During 2016, Devin's share of XYZ LP's deductible losses was $20,000. In 2016, Devin also had $9,000 in passive income from another LP, $100,000 in salary income (active income), and $10,000 in dividend income (portfolio income). What amount of the $20,000 loss from XYZ LP can Devin deduct in 2016?
8. In 2014, Declan invested $100,000 as a limited partner in an LP (passive activity). Declan's share of the LP's losses for 2014 was $25,000, and Declan had no passive income for 2014. Declan's share of the LP's losses for 2015 was $5,000, and Declan had no passive income for 2015. On January 1, 2016, Declan sold his LP interest. Declan's only other income for 2016 was salary of $50,000 per year. What amount of passive activity losses from the LP can Declan deduct in 2016?
9. Jay acquired an LP interest (passive activity) in 2015 for $20,000. Jay's share of the partnership's deductible losses for 2015 was $25,000, and Jay had no passive activity income in 2015. Jay share of the partnership's income for 2016 was $35,000, and Jay had no other passive activity income in 2016. What amount can Jay deduct in 2016?