Juanita,who Is Single,is in an Automobile Accident in 2015 and Her

question 53

Multiple Choice

Juanita,who is single,is in an automobile accident in 2015 and her car sustains $6,200 in damages.Because both drivers received tickets in the accident,Juanita does not expect to recover any of the loss from her insurance company.Juanita's 2015 AGI is $31,000,and she deducts a $3,000 loss on her 2015 tax return.Her other itemized deductions in 2015 exceed $12,000.In 2016,Juanita's insurance company reimburses her $2,800.Juanita's 2016 AGI is $28,000.As a result,Juanita must

• A)amend 2015 to show a $200 loss.
• B)do nothing and simply keep the $2,800.
• C)do nothing to the 2015 return but report $2,800 of income on her 2016 return.
• D)amend the 2015 return to show $0 loss and file her 2016 return to show a $200 loss.

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Definitions:

Commercial Substance

A concept in accounting that signifies a transaction causes a change in the future cash flows that is significant to a business.

Asset Turnover

A financial ratio that measures the efficiency of a company in using its assets to generate sales or revenue.

Net Sales

The net income generated from sales after deducting returns, allowances, and discounts.

Total Assets

The combined value of all owned resources and property by an entity that has economic value.