Howard is a dry farmer. During 2021, a fire completely destroyed one of his barns. The adjusted basis of the barn was $80,000. The fair market value of the barn was $60,000 before the fire. The barn was insured for 90% of its fair market value, and Howard recovered this amount under the barn's insurance policy. He had adjusted gross income of $35,000 for the year (before considering the casualty). Calculate the amount of loss he can deduct on his tax return for 2021. You do not need to include the dollar sign, commas, and/or cents in your answer. 

On May 3, 2020, Kimball's Beds sold Sharon a king-sized bed on account for $5,000. Kimball's Beds uses the accrual method. In 2021, when the balance on the account was $2,000, Sharon filed for bankruptcy. Kimball was notified that he could not expect to receive any of the amount owed to him. In 2022, final settlement was made and Kimball received $500. Calculate the amount of bad debt loss Kimball can deduct in 2022. You do not need to include dollar sign, commas, or cents in your answer.

Angela and Andy own a house at the beach. The house was rented to unrelated parties for seven weeks in 2021. During their vacation, Angela and the children used the house for 14 days. After properly dividing the expenses between rental and personal use, it was determined that a loss was incurred as follows:

Gross Income $5,000

Less: Mortgage interest and property taxes $3,000

Other allocated expenses 3,700 (6,700)

Net rental loss 1,700

What is the correct treatment of the rental income and expenses on Angela and Andy's joint income tax return for the current year assuming the IRS approach is used if applicable?

A.

Only the mortgage interest and property taxes should be deducted

B.

Angela and Andy should include none of the rental income or expenses related to the beach house in their current year income tax return

 

C.

Since the house was used more than 10 days personally by Angela and Andy, the rental expenses (other than mortgage interest and property taxes) are limited to the gross rental income in excess of deductions for interest and taxes allocated to the rental use.

D.

A $1,700 loss should be reported.

E.

None of these

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