Ask Question
21 November, 13:03

Drake operates a trucking business, and one of his trucks was damaged in a traffic accident. The truck was purchased for $52,000 and the adjusted basis was $22,000 at the time of the accident. The truck was repaired at a cost of $5,000 and insurance reimbursed Drake $2,000 of this cost. What is the amount of Drake's casualty loss deduction?

+4
Answers (1)
  1. 21 November, 14:32
    0
    The amount of Drake's casualty loss deduction is $3,000

    Explanation:

    The deduction amount would be less of the adjusted basis or net cost of the truck

    where,

    Adjusted basis = $22,000

    And, the net cost would be equal to

    = Repair cost - reimbursement cost of insurance

    = $5,000 - $2,000

    = $3,000

    So, by comparing both the amounts, the $3000 would show a lesser amount than adjusted basis ($22,000)

    And, the purchase cost of the truck would be ignored. Thus, it is not considered in the computation part.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Drake operates a trucking business, and one of his trucks was damaged in a traffic accident. The truck was purchased for $52,000 and the ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers