Question

Explain the difference between calculating a loss deduction for a business assets that was partially damaged...

Explain the difference between calculating a loss deduction for a business assets that was partially damaged in an accident and a loss deduction for a business assets that was stolen or completely destroyed in an accident. Please explain in detail.

(Please explain more detailed that the previous posts to this question.)

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Answer #1

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When a business asset is completely destroyed or stolen, the amount of the business’s loss is calculated as though the business sold the asset for the insurance proceeds, if any (i.e., insurance proceeds minus adjusted basis).

If the asset is damaged but not completely destroyed, the amount of the loss is the amount of the insurance proceeds minus the lesser of (1) the asset’s tax basis or (2) the decline in the value of the asset due to the casualty.

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