Your client built a house in 2012 at a cost of $2 million dollars. During Harvey...

Your client built a house in 2012 at a cost of $2 million dollars. During Harvey storm, the house got flooded and there was 2 ft. of water in the house. He finished remodeling the house in 2018 at a cost of $150,000. The approximate square feet of the house is 10,000. The fair market of the house before the flood damage was $2,125,000 and the fair market value after the flood damage was $1,500,000. There was a considerable damage to the furniture, fixtures and other contents of the house. Calculate Casualty loss from the house assuming his AGI for 2017 is $350,000. He had no flood insurance. (3 children, one in college and two other small children)

Fill out form 4684 - casualty loss

Explain how you came up with the calculations.

Expert Solution

Solution:

Calculation of Casualty Loss -

Casualty loss is lower of adjusted basis before storm 9or0 decrease in fair value after storm

Form 4684

Personal use property

ekkarill92 answered 1 year ago

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