Question
In: Accounting
Tim suffered greatly this year. In January a freak storm damaged his sailboat and in July...
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 $28,650 for the boat, but he was able to repair the damage for $9,800. Tim paid $14,800 for the motorcycle, but it was worth $16,850 before it was stolen. Insurance reimbursed $1,420 for the boat repairs and the cycle was uninsured.
a. Calculate Tim's deductible casualty loss if his
AGI is $46,000.
Solutions
Expert Solution
Sail Boat Motor Cycle
Decline in value or repair cost $ 9800 $ 16850
Adjusted basis $ 28650 $ 14800
Lesser of basis or value $ 9800 $ 14800
Less : insurance proceeds - $ 1420
uninsured loss $ 8380 $ 14800
Per casualty floor- - $ 100 - $ 100
Casualty Loss $ 8280 $ 14700
Tim must reduce this by 18 % of his AGI which is $ 8280 ($46000*18%).
Hence, Tim can claim a $ 14700 casualty loss deduction this year.
ekkarill92 answered 1 year agoRelated Solutions
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