Calzone Trucking Company is a corporation that is 100% owned by Fred Calzone. Before he incorporated in 2007, Fred had operated the business as a sole proprietorship. The taxable income (loss) of Calzone for 2007 through 2009 is as follows:
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2007 2008
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2009
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Taxable income (loss)
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$32,000 $(64,000)
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$18,000
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The 2009 taxable income includes a net long-term capital gain of $4,000. Calzone Trucking's 2010 operating income is $43,300 before considering the following transactions:
a. A hailstorm caused part of the roof of the truck barn to collapse. A truck inside sus- tained damage from the falling debris. The truck barn had a fair market value of $59,000 before the damage and an adjusted basis of $35,000. Repairs to the roof cost $13,200, of which $9,700 was reimbursed by insurance. The truck, which had an adjusted basis of $35,000, was worth $62,000 before the damage and had a fair market value after the damage of $37,000. Calzone Trucking's insurance company paid $16,600 for the damages.
b. Another truck was totally destroyed when its brakes failed and it plunged off a cliff. Fortunately, the driver was able to jump from the truck and escaped unharmed. The truck, which had an adjusted basis of $24,000, was worth $30,000 before the accident. Calzone received $13,700 from its insurance company for the destruction of the truck. In addition, the company was cited for failure to properly maintain the truck and paid a $7,250 fine to the state trucking commission.
c. Calzone sold equipment that had become obsolete for $10,800. The equipment had cost $28,000, and depreciation of $15,400 had been taken on it before the sale.
d. Calzone sold stock it owned in two other companies. Retro Corporation stock, which had cost $21,400, sold for $36,200. Shares of Tread Corporation stock with a cost of $62,100 sold for $31,700. Both stocks had been purchased in 2006.
e. Fred's son wanted to start a delivery business. To help his son out, Fred sold him one of Calzone's used trucks for $8,000. The truck had a fair market value of $15,200 and an adjusted basis of $10,100 at the date of the sale.
Calculate Calzone Trucking's 2010 taxable income. Indicate the amount and the effect of any carryforwards or carrybacks on Calzone Trucking's current, past, or future income.