Julie, Who Is Single, Reports the Following Items for 2019

question 55

Essay

Julie, who is single, reports the following items for 2019:
∙ Salary-$100,000.
∙ A hurricane completely destroyed Julie's duplex during the current year.She lived in one- half of the duplex and rented out the other half.Julie paid $400,000 for the duplex and
has taken $80,000 of cost recovery on the rental portion of the duplex.The duplex was worth $420,000 at the time of the destruction.Julie's insurance policy paid her 90% of the fair market value of the duplex.After the storm, her county was declared a Federal disaster area.
∙ Household items destroyed in the hurricane had a basis of $15,000 and a fair market value of $8,500.There was no insurance recovery on the household items.
Julie purchased a painting three years ago for $4,000.At the time of the hurricane, the painting was worth $10,000.Julie purchased the painting as an investment with the intent
∙ that she would sell it when its value exceeded $12,000.There was no insurance recovery on the painting.
∙ Julie had an automobile accident in the current year.She used the car 100% for personal purposes.The car cost $37,000 and had a decline of $5,000 in FMV as a result of the accident.The car was insured, but the policy had a $2,000 deductible clause.Julie chose not to file a claim for the damage.
∙ Julie owned a computer that she used 100% for business.The computer was also completely destroyed in the hurricane.It had a basis of $6,000 and an FMV of $4,000 at the time it was destroyed.She was not reimbursed by her employer for the loss on the computer.
∙ Home mortgage interest-$10,000.
Determine the amount of Julie's taxable income for 2019.

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Definitions:

Rational Strategy-making

The process of decision-making in business that is based on logical reasoning, thorough analysis, and factual evidence.

Top Management

The highest tier of executives and decision-makers in an organization responsible for determining strategy and direction.

Scenario Writing

The process of creating detailed narratives or scenarios to explore future possibilities and assess potential outcomes.

Identifiable Factors

Elements or conditions that can be recognized and potentially measured, which influence outcomes or results in various situations.