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Derrick owns a farm in eastern North Carolina. A hurricane hit the area (a national disaster area was declared) and destroyed a farm building and
Derrick owns a farm in eastern North Carolina. A hurricane hit the area (a national disaster area was declared) and destroyed a farm building and some farm equipment and damaged a barn. Insurance Item Adjusted Basis FMV before Damage FMV after Damage Proceeds Building $ 123,308 $ 177,eee $ $ 69,600 Equipment 80,280 55,9ee 19,600 Barn 122,700 197,700 122,7ee 57,900 Due to the extensive damage throughout the area, the president of the United States declared all areas affected by the hurricane as a disaster area. Derrick, who files a joint return with his wife, had $57,000 of taxable income last year. Their taxable income for the current year is $186,000, excluding the loss from the hurricane. Required: a-1. Calculate the amount of the loss deductible by Derrick and his wife. a-2. What amount of loss should be adjusted against current and last year? Answer is complete but not entirely correct. Loss Amount S 145,100 a- 1. a- 2. Last year S 57,000 Current year s 88 100 x
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