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What is Brett's allowable casualty loss deduction?

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Brett had adjusted gross income of $60,000. During the year, his personal use summer home was partially destroyed by a fire. Pertinent data with respect to the home follows:

Cost basis $ 250,000
Value before casualty $ 270,000
Value after casualty $ 130,000

Brett was insured for 70% of his actual loss and he received the insurance settlement. What is Brett's allowable casualty loss deduction?

a. $140,000.
b. $42,000.
c. $36,000.
d. $35,900.
e. $0.

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The solution provides detailed explanations and answer for the problem. The expert determines what is Brett's allowable casualty loss deduction.

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Any loss have to be based on the cost basis. So the total loss = 250K - ...

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