John had adjusted gross income of $60,000 in 2019. During the year, his personal use summer home was damaged by a fire. Pertinent data with respect to the home follows: $\begin{array}{lr}
\text { Cost basis } & \$ 260,000 \
\text { Value before the fire } & 400,000 \
\text { Value after the fire } & 100,000 \
\text { Insurance recovery } & 270,000
\end{array}$ John had an accident with his personal use car. As a result of the accident, He was cited with reckless driving and willful negligence. Pertinent data with respect to the car follows: $\begin{array}{lr}
\text { Cost basis } & \$ 80,000 \
\text { Value before the accident } & 56,000 \
\text { Value after the accident } & 20,000 \
\text { Insurance recovery } & 18,000
\end{array}$ What is John's itemized casualty loss deduction?

Question

Quizplus · Accepted Answer

Casualty losses for personal use property are deductible only to the extent that they exceed 10% of the taxpayer's adjusted gross income (AGI) and a $100 floor per casualty event. In John's case, the loss on the summer home is fully compensated by insurance, and the loss due to reckless driving and willful negligence is not deductible. Therefore, John has no deductible casualty loss.

John Had Adjusted Gross Income of $60,000 in 2019 John Had an Accident with His Personal Use Car