|
|
| Back to Tax School Homepage |
|
California Tax Topic 4 - California Casualties and Theft Losses
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
Most forms are in Adobe Acrobat PDF format.
 You
will need Adobe Reader to view and print these forms. If you do not
already have Adobe Reader installed on your computer, you may
download the software for free.
Use California FTB Pub. 1034 to complete this topic. Complete a Form 4684 for Walter Brubeck (609-03-0321). On August 30, 2009, a fire storm caused extensive property damage to Walter's home. He had originally purchased the home for $94,000. The purchase price was allocated between the land ($18,000) and the building ($76,000). Walter planted trees and ornamental shrubs on the grounds surrounding his home at a cost of $1,200. The fair market value immediately before the storm was $102,000 ($84,000 for building and $18,000 land); immediately afterwards the value was $74,000 ($56,000 for building and $18,000 for the land). The fair market value of the trees and shrubs immediately before the casualty was $2,000 and immediately afterwards; $100. Insurance of $15,000 is received to cover the total damage. Complete Form 1040, Form 4684, Schedule A (or Schedule L) and California Form 540 (and Schedule CA if needed). You may also need Form 1040 Instructions. Complete the Forms and Schedules that give Walter the best tax benefit. You will also need to look up tax for California in tax table or use the tax calculator. Walter and his girlfriend have been together for 1 year. They do not have any children and are not married. They lived together all of 2009. Her name is Wilma Thornton (SSN: 070-82-5991). Wilma did not work because she was a student for all of 2009. They plan to get married when Wilma graduates from school. Use the following Form W-2 to complete the return. The income and address information is current.
1. Look at the Form 540 you prepared for Walter. What is the amount on Form 540, Line 18?
A.
$14,181. 2. Look at the Form 540 you prepared for Walter. What is the amount on Form 540, Line 115?
A.
$217. 3. When your property is lost or damaged due to an earthquake, fire, flood, or similar event that is sudden, unexpected, or unusual, it is considered a
A. Sudden event. 4. California law is generally the same as federal law for casualties and disaster lose deductions. True False 5. What documentation must you attach to your California return to report your losses?
A. Schedule D-1. 6. You may qualify to carry over excess disaster losses if subsequent California legislation identifies your disaster for the special carryover treatment. The disaster provisions of R&TC 17207 and 24347.5 allow disaster victims to carryover 100% of the excess loss for up to
A. 15 years. 7. As an individual, you can calculate your disaster loss by reporting California amounts on IRS Form 4684, submitting this form with your California tax return. You will also need to attach
A. A statement with full details of your whereabouts during the
disaster. 8. Your disaster loss documentation must include certain Internal Revenue Service forms. You must also attach a clearly written statement to your loss documentation that includes
A. The date of the loss. 9. If your returns are lost or damaged due to disaster, FTB will replace your California returns at a nominal cost. True False 10. Special tax rules apply to disaster losses. You can claim a disaster loss in the tax year the disaster occurred or in the tax year before the disaster occurred. The benefit to claiming your disaster loss in the prior year is that FTB can issue you a refund very quickly. True False 11. California automatically follows federal postponement periods as announced by the IRS. If the IRS postpones a tax deadline, the following taxpayers are eligible for postponement, except
A. Any individual whose main home is located in a covered disaster area. 12. You must also include Internal Revenue Service (IRS) forms in your disaster loss documentation, such as
A. A completed IRS Form 4684, Casualties and Thefts using California
amounts, and any supporting IRS schedules that verify your deduction.
13. If you electronically file your disaster loss tax return, you will receive your refund within 7 days if you choose to have it deposited directly into a bank account or with 10 days by mail. True False 14. To qualify as a disaster loss for federal purposes, the President of the United States must declare the area in which the disaster occurred as a disaster area, eligible for federal assistance under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. This does not include
A. A mayor disaster or emergency declaration under the Act. 15. If you have both disaster loss carryovers and net operating loss carryovers, you must use them in the order you incurred them. True False 16. You usually qualify for a casualty loss deduction for tax purposes when insurance or other reimbursements do not repay you for damage to your property. Your casualty loss becomes a disaster loss when
A. You sustain the loss in an area the President of the United States or
the governor of California designates as a disaster area. 17. If you meet the qualifications to claim a disaster loss anywhere within the United States and have a California tax-filing requirement (resident or nonresident), the same disaster rules and postponement periods automatically apply to you. True False 18. For disaster losses incurred in prior tax years, you can deduct any excess loss that remains after the five-year period for up to
A. 5 years. 19. Determine your business loss by using the smaller of the decrease in fair market value of your property due to the casualty or the adjusted basis of the property. True False 20. If you have already filed your return for the preceding year, you can claim a disaster loss against that year's income by filing
A. Form 540. 21. President Obama declared a major disaster for Imperial County as a result of the April 4, 2010, earthquake. This was the
A. Baja California Earthquake 2010. 22. The taxpayers affected by any of the California earthquakes should write the name of the disaster in red ink at bottom of their tax return after their signature of their return in the year they claim the loss. True False 23. A pronouncement by the Governor of California declaring an area as a disaster or emergency area is enough to qualify as a disaster loss for federal purposes. True False 24. California automatically follows federal postponement periods as announced by the Internal Revenue Service (IRS). The IRS may postpone for to _____ certain tax deadlines for taxpayers affected by a Presidentially declared disaster.
A. 10 years. 25. Determine your personal loss by using the smaller of the decrease in the fair market value of your property due to the casualty or the adjusted basis of the property. Fair market value means
A. The amount at which property would change hands between a buyer who
is stressed to sell. 26. Compute your tax loss on your federal tax return and transfer that loss amount to your California return. Since California conforms to federal, you never need to make adjustments between state and federal tax laws on your California return. True False 27. If you sustained a disaster loss in July of 2009, you can claim the loss in your 2009 return when you file it by
A. April 15, 2010. 28. You cannot use disaster losses in computing a net operating loss deduction under Internal Revenue Code (IRC) Section 172. True False 29. Taxpayers may e-file any returns. Paper format is not an option even if it is for a previous year return. True False 30. This generally means what you paid for the property plus the cost of any improvements, less deductions such as depreciation.
A. Fair market value.
|
| Back to Tax School Homepage |
