Question

Problem 5-18 Casualty and Theft Losses (LO 5.5) On January 3, 2017, Carey discovers his diamond bracelet has been stolen. The bracelet had a fair market value and adjusted basis of $7,500. Assuming Carey had no insurance coverage on the bracelet and his adjusted gross income for 2017 is $45,000, calculate the amount of his theft loss deduction (after any limitations).

Answer 1

Gross Loss	$7,500
Less : Floor Limitation	$100
Net Loss	$7,400
Less : 10% of AGI	4500
Carey theft Loss deduction	2900
As per the tax Law, Carey needs to deduct $ 100 from the Gross loss and from this net loss 10% of adjusted gross income should be reduced the balance would be allowed as deduction