Glenn and mary's house was damaged by a hurricane in 2017. the fair value of their home before the hurricane was $150,000. after the hurricane, the fair value of their home was $125,000. they received $10,000 from their homeowners' insurance policy. what is their casualty loss deduction for 2017, if their adjusted gross income was $40,000?

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Makhi Hill

24 August, 01:32

Glenn and mary's house was damaged by a hurricane in 2017. the fair value of their home before the hurricane was $150,000. after the hurricane, the fair value of their home was $125,000. they received $10,000 from their homeowners' insurance policy. what is their casualty loss deduction for 2017, if their adjusted gross income was $40,000?

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Gabriel Armstrong · Answer 1

A casualty loss is measured as the difference between the fair value of an affected asset before the loss and the fair value after the loss, indicating a total casualty loss of $150,000 - $125,000 or $25,000. This is reduced by insurance proceeds of $10,000, resulting in a net casualty loss of $15,000. Each casualty loss is reduced by $100 to determine the deductible amount, which would be $14,900. The itemized deduction will be the total of all casualty losses reduced by 10% of AGI, or $4,000, giving an itemized deduction for casualty losses of $10,900.