Question

A hurricane (declared a federal disaster) damaged a personal auto owned by Mr. and Mrs. South on June 15, 2018. Fair market value before the flood $18,500 Fair market value after the flood 2,000 Cost basis 20,000 Insurance proceeds 13,000 Adjusted gross income for this year 25,000 Calculate the South's deductible casualty loss.

Answer 1

$900

Step-by-step explanation:

South's deductible casualty loss = $900

Fair market value before the flood 18500

Fair market value after the flood (2000)

Decline in FMV 16500

Cost basis 20000

Lesser of basis or decline in FMV 16500

Minus: Insurance proceeds (13000)

Net loss 3500

Minus: $100 Floor (100)

10% of AGI (2500)

Deductible Loss 900