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Tax Topic 7 - Casualties and Theft Losses
Here you will become aware of the special rules for the disaster area losses such as when your property is damaged due to storm, fire, car accident and events of that sort. In addition, you will explore what to do when someone steals your property or when you have a loss of deposit as in the event that your bank becomes insolvent or files bankruptcy. In this topic you will learn what is a casualty and theft loss and how to figure the amount of your loss. You will learn what to do when you receive insurance reimbursements for your loss and when and how to report a casualty or theft loss.Tax School Homepage Student Instructions: Print this page, work on the questions and then submit test by mailing the answer sheet or by completing quiz online. Instructions to submit quiz online successfully: Step-by-Step check list Answer Sheet Quiz Online
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Use IRS Publication 547, and Form 1040 Instructions (Form 1040 instructions only up to page 98) and Schedule A (1040) instructions to complete this tax topic. Please note: Form 1040 Instructions (Form 1040 instructions only up to page 98) will be used for the rest of the topics in the initial tax preparer certification course. You will be responsible to answer questions from the Form 1040 instructions booklet (up to page 98) on every topic so read it carefully. Complete a Tax Return: Complete a Form 4684 for Andrew Martinez (699-03-6021). On August 30, 2013, a severe storm caused extensive property damage to Andrew's home. The original purchase of the home and the landscaping had a original basis of $91,200. The basis is allocated between the land ($18,000) and the building ($73,200) including the trees and ornamental shrubs Andrew planted on the grounds surrounding his home. The fair market value immediately before the storm was $100,000 ($82,000 for building and $18,000 land); immediately afterwards the value was $70,100 ($52,100 for building and $18,000 for the land). Insurance reimbursement of $15,000 is received to cover the total damage. Complete a Schedule A using the results from Form 4684. After that prepare a Federal Form 1040. Use the information provided here, assume nothing else. Andrew and his girlfriend have been together for 1 year. They do not have any children and are not married. They lived together all of 2013. Her name is Cindy Thomson (SSN: 012-92-8910). Cindy did not work because she was a student for all of 2013. They plan to get married when Cindy graduates from school. In addition to his earnings, Andrew had the following for 2013:
Use this Form W-2 for address and income information. All information is current.
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