Question

In: Accounting

Norm’s car, which he uses 100% for personal purposes, was completely destroyed in an accident in...

Norm’s car, which he uses 100% for personal purposes, was completely destroyed in an accident in 2018. The car’s adjusted basis at the time of the accident was $13,000. Its fair market value was $10,000. The car was covered by a $2,000 deductible insurance policy. Norm did not file a claim against the insurance policy because of a fear that reporting the accident would result in a substantial increase in his insurance rates. His adjusted gross income was $14,000 (before considering the loss). What is Norm’s deductible loss?

Group of answer choices

None of the above

$500

$0

$9,500

$100

Solutions

Expert Solution

Here,lesser of adjusted basis or FMV decline is FMV which is $10000

Deductible loss = $10000-($10000-$2000)-100-0.10*14000 ( Here,$100 is Statutory Factor)

= $500

So,Correct option is $500

ekkarill92 answered 2 years ago
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