Losses and Bad Debts
When property is disposed of, what factors influence the amount of the deductible loss? Define.
What is the importance, if any, of passive activity?
Compare and contrast the computational rules for deducting casualty losses on personal-use property with casualty losses incurred on business or investment property. Define the difference. What are the limitations for both?
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Taxes: Responses
When property is disposed of, what factors influence the amount of the deductible loss?
The amount of deductible loss during the disposal process of any property is dependent on several factors including whether the loss therein is capital or ordinary in nature. Capital losses are the types of losses incurred by an investor from investment in capital assets such as stocks and bonds. On the other hand, ordinary losses are limited to losses in normal business transactions. In case of the ordinary losses, deductible losses could result from various processes, all of which could influence the efficiency of the sold product in meeting the buyer’s demands.
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