Reference no: EM132517391

Question - Answer the following questions and explain.

Q1. In 2019, Clark's residence had an adjusted basis of $250,000 and it was destroyed by a tornado. The residence was located in a federally declared disaster area. An appraiser valued the decline in market value at $425,000. Later that same year, Clark received $200,000 from his insurance company for the property loss and did not elect to deduct the casualty loss in an earlier year. Clark's 2019 adjusted gross income was $100,000, and he did not have any casualty gains. What is total amount that Clark can deduct as a 2019 itemized deduction for casualty loss, after the application of the threshold limitations?

Q2. A self-employed taxpayer had gross income of $57,000. The taxpayer paid self-employment tax of $8,000, health insurance of $6,000, and $5,000 of alimony for a divorce finalized in 2017. The taxpayer also contributed $2,000 to a traditional IRA. What is the taxpayer's adjusted gross income?