Question

all of the following are true regarding a casualty loss deduction that occurred within a federally...

all of the following are true regarding a casualty loss deduction that occurred within a federally declared disaster area EXCEPT

a. the deduction is reported as a miscellaneous deduction subject to the 2% of AGI limitation

b. the losses may be deducted in the year prior to the year the disaster occurred

c. the losses may be deducted in the year the disaster occurred

d. net losses must be reduced by $100 and 10% of the taxpayer's AGI

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Answer #1

ANSWER:THE DEDUCTION IS REPORTED AS A MISCELLANEOUS DEDUCTION SUBJECT TO THE 2% OF AGI LIMITATION.

EXPLANATION

For a federally declared disaster the loss is reduced by $100 per event and 10% of the taxpayers AGI.The loss can be deducted in the disaster year and you can also elect to deduct the loss on your return for the tax year immediately preceeding the disaster year.Then it is treated as the loss is happened inthe preceeding year.So the all the three statement except the first statement is true regarding  casualty loss deduction that occurred within a federally declared disaster area .

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