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Deductible Loss After Limitation 2013

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Jarrett owns a mountain chalet that he purchased in 1999 for $175,000. This year, the home appraised at $300,000. Shortly after the appraisal, a blizzard hit the area in spring of the current year, destroying trees and severely damaging several homes, including Jarrett's chalet. Its value was reduced to $135,000. Jarrett does not have insurance. Jarrett's AGI is $80,000. Jarrett's deductible loss after limitations is:

A. $135,000.
B. $156,900.
C. $164,900.
D. $165,000.

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Solution Summary

This solution provides the correct answer, calculation, and explanation to the deductible loss after limitation question presented. This is based on 2013 tax law.

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Per IRS regulation, the amount deductible, after limitation, would be the decrease in the fair market value of the personal property as a result of the casualty. In this case, the FMV is ...

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