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$1.$ Marsha Brady, a lawyer, whose filing status is head of household, is not blind, is under the age of $65,$ and has $1$ dependent, operates a small pottery business in her spare time.

Net revenue from sale of pottery $$9,800$

Expenses from sale of pottery:

Depreciation on potter's wheel $3,700$

Property taxes on her pottery shed $4,115$

Supplies used such as clay, etc. $6,300$

In addition, she had salary of $$85,000$ and itemized deductions, not including any listed above, of $$18,225.$

a$.$ During $2023,$ if Marsha classified the above income and expenses from this activity as a hobby:

$$ What is the amount of Marsha$$s AGI in $2023?$

$$ What is the amount of Marsha$$s taxable income in $2023($ignoring any qualified business income deduction$)?$

b$.$ During $2023,$ if Marsha classified the above income and expenses from this activity as a business:

$$ What is the amount of Marsha$$s AGI in $2023?$

$$ What is the amount of Marsha$$s taxable income in $2023($ignoring any qualified business income deduction$)?$

$2.$ During $2023,$ Bobby Brady rented his vacation home for $75$ days and stayed in his vacation home for $25$ days. Gross rental income from the property was $$8,200.$ Bobby incurred the following expenses: mortgage interest, $$4,600$; real estate taxes, $$1,300$; utilities, $$950$; maintenance, $$450$; and depreciation, $$4,000.$ You might find Chapter $6,$ Example $38$ in the textbook helpful in completing this problem!

Using the IRS$$s approach, compute:

$(1)$ Bobby$$s net rent income or loss, showing all calculations $($his realized amount$).$

$(2)$ The amount$($s$),$ if any, that Bobby will report on his Schedule A as an itemized deduction.

$(3)$ Any carryover amounts.

$3.$ Determine the net deductible casualty gain or loss for Jan Brady when her Adjusted Gross Income was $$52,710$ in $2023$ before the following occurred:

Insurance

Asset Adj. Basis FMV Before FMV After Reimbursement

A $$1,400$ $ $2,800$ $ $500$ $ $510$

B $13,5209,6503,9001,100$

C $9003,0001,700675$

Assets A$,$ B$,$ and C were each destroyed in separate casualties. $($Yes$,$ it was a rough year for Jan!$)$

All casualties were nonbusiness, personal$-$use property and they all occurred in a Federally declared disaster area.

What is the amount of the net deductible casualty gain or loss that should be reported on Jan$$s Schedule A $($line $15)?$

$4.$ Greg and Mary Brady, married filing joint, had the following items for $2023$:

Salaries $$196,500$

Casualty loss on long$-$term business property $(12,400)$

Loss on sale of $1244$ small business stock acquired $6$ years ago $(112,500)$

Stock acquired $4$ years ago became worthless during the year $(4,500)$

Loss on non$-$business bad debt that has been held for $8$ years $(7,300)$

Long$-$term capital gain on sale of investment $18,250$

Interest income from Wells Fargo money market account $7,500$

a$.$ List any ordinary income and ordinary deduction items and their dollar amounts.

b$.$ List any short$-$term capital gains and capital losses items and their dollar amounts.

c$.$ List any long$-$term capital gains and capital losses items and their dollar amounts.

d$.$ Determine Greg and Mary$$s adjusted gross income for $2023.$

$5.$ Sam the Butcher acquires the following new five$-$year class property in $2023.$ Use $$1,160,000$ as the maximum $179$ amount:

Asset Acquisition Date Cost

A February $10$ $$1,175,000$

B August $161,480,000$

C December $20790,000$

Sam elects $179$ for Asset A only. Sam$$s taxable income from the butcher shop would not create a limitation for purposes of the $179$ deduction. Sam elects not to take the additional first$-$year depreciation.

$1.$ State the convention $($half$-$year or mid$-$quarter$)$ that will be used when calculating the depreciation and show the calculation as to why that convention should be used.

$2.$ Determine Sam$$s depreciation deduction for each asset for $2023.$

$3.$ Determine Sam$$s total depreciation deduction for $2023.$

$6.$ For each of the following independent scenarios, determine the maximum depreciation amount.

a$.$ In January $2023,$ Carol Brady is trying to decide if she should purchase a new vehicle for her business, We Are Brady, Inc. Carol has asked you to calculate the amount of depreciation that she will be able to deduct for the following vehicle that she is considering purchasing. Assume that she will purchase the vehicle in May $2023$ and assume that no other assets will be purchased in $2023.$

If Carol purchases a new Lexus LS $500$ F Sport for $$82,850,$ what is the maximum depreciation amount that Carol may deduc

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