Question

Noelle's diamond ring was stolen in 2017. She originally paid $15,100 for the ring, but it was worth considerably more at the time of the theft. Noelle filed an insurance claim for the stolen ring, but the claim was denied. Because the insurance claim was denied, Noelle took a casualty loss for the stolen ring on her 2017 tax return. In 2017, Noelle had AGI of $75,500. In 2018, the insurance company had a "change of heart" and sent Noelle a check for $9,060 for the stolen ring. The per event floor is $100. What is the proper tax treatment of the $9,060 Noelle received from the insurance company in 2018? Noelle should the amount of $ .

Answer 1

Noelle should include reimbursement to the extent of

In previous year she received the following deduction

Particulars	Amount
Gross loss	$15,100
Less: per event deduction	$100
AGI floor	$7,550
Net deduction	$7,450

she should now include it in the gross income.