Question

Item 7

In 2019, the Jurics' pleasure boat was severely damaged by a hurricane in a region that was declared a federally disaster area. They had AGI of $110,000 in 2019. The following information relates to the craft:

Cost Basis	$	95,000
FMV before casualty		145,000
FMV after casualty		25,000

The Jurics had insurance and received an $80,000 insurance settlement.
What is the allowable casualty loss deduction for the Jurics in 2019?

Multiple Choice

• $50,000.

• $15,000.

• $3,900.

• $3,000.

Answer 1

Answer

The Correct Option is C : $3,900

Explanation

esser of :-

1. Adjusted basis of the property or the cost basis. ($95000) or.

2.The decrease in FMV of the property as the result of the casuality ($145000-$25000=$120000)

which ever is lower = $ 95000.

Hence Casuality loss = $ 95000-$80000 = $15000

Casuality loss deduction = Casuality loss after Insurance deduction -$100 - 10% of AGI

$15000-$100-(10%*$110000) = $3900

Therfore

Option C is correct