Question

Tim suffered greatly this year. In January a freak storm damaged his sailboat and in July Tim's motorcycle was stolen from his vacation home. Tim originally paid $22,250 for the boat, but he was able to repair the damage for $6,500. Tim paid $19,800 for the motorcycle, but it was worth $22,200 before it was stolen. Insurance reimbursed $1,190 for the boat repairs and the cycle was uninsured.

a.	Calculate Tim's deductible casualty loss if his AGI is $50,000.

       Deductible casualty loss_____

b.	Calculate Tim's deductible casualty loss if his AGI is $150,000.

              Deductible casualty loss_____

c.	How would you answer a. if Tim received an additional $65,000 in interest from municipal bonds this year?

             Deductible casualty loss_____

Answer 1

Ans:

a)

Account details	boats	cycle
decline in value	$6,500	$22,200
adjusted basis	$22,250	$19,800
lesser of basis or value	$6,500	$19,800
less: insurance proceeds	$1,190
uninsured loss	= 6,500-1,190 = $5,310	$19,800
per caustly floor (assume)	$100	$100
casuality loss	= $5,310 - $100 = $5,210	= $19,800 - $100 = $19,700

Deductible casuality loss = [ $5,210+ $ 19,700 ] - [ $50,000 * 10%]

= [ $24910] - [ $5000]

= $19,910

Deductible casuality loss = $19,910

(b) :-

Deductible casuality loss =  [ $5,210+ $ 19,700 ] - $150,000 * 10%

= $24910 - $15000

= $9,910

Deductible casuality loss = $9,910

(c):-

The enthusiasm on metropolitan bonds is barred from gross pay so this pay would not influence. Tim's AGI and would not , along these lines have any impact on the loss misfortune deduction.Tim's deductible setback misfortune conclusion would at present be $19,910.

Deductible casualty loss = $19,910