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AGI Calculation with a casualty loss

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During the current year, Jacob's personal residence, some of the contents, and his car were damaged or destroyed b a fire. Information with respect to the damaged and destroyed assets is as follows:

Asset Adjusted Balance FMV Before FMV After Insurance Recovery
Home $300,000 $400,000 $350,000 $70,000
Car $60,000 $55,000 $- $20,000
Contents $80,000 $60,000 $10,000 $10,000

If Jacob's AGI is $100,000 before considering the effects of the fire, determine the amount the amount of his deduction for the loss.

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Solution Summary

The solution explains the calculation of the casualty loss and how it fits into AGI

Solution Preview

I calculate the casualty loss deduction as follows:

House: no deductible loss on the house because their cost basis is $300K; they lost $50K of value, but were reimbursed for $70K. ...

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