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Carlson Corporation a calendar year c corporation owned a truck it used in its business operation...

Carlson Corporation a calendar year c corporation owned a truck it used in its business operation that was fully depreciated. The truck was involved in an accident. Immediately before the accident, the fair market value of the truck was $12,000. Immediately after the accident, the fair market value of the truck was $7,000. Carlson only carried liability insurance on the vehicle so it did not receive any insurance reimbursement for the damage to the truck. Under the circumstances, what amount is deductible by Carlson Corporation as a casualty loss?

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Expert Solution

Amount Deductible as casualty loss:

Casualty loss are deductible upto $100 threshold per loss event or an overall threshold of 10% of your adjusted gross income.They donot include any property that is covered by insurance if the insurance company reimburses the loss.

In the given question damage to truck reduced its value by $5000(12000-7000). Hence, $4900 is deductible as casualty loss afte allowing $100 threshold limit. Also,the loss amount would be further reduced by 10% of adjusted gross income i.e the overall threshold.

jeff jeffy answered 2 years ago
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