In the current year,Marcus reports the following casualty gains and losses on personal-use property.Assets X and Y are destroyed in the first casualty while Z is destroyed in a second casualty. As a result of these losses and insurance recoveries,Marcus must report

Question

In the current year,Marcus reports the following casualty gains and losses on personal-use property.Assets X and Y are destroyed in the first casualty while Z is destroyed in a second casualty.  As a result of these losses and insurance recoveries,Marcus must report

Quizplus · Accepted Answer

For asset X, Marcus reports a casualty loss of $9,000 and an insurance recovery of $14,000, resulting in a long-term capital gain of $5,000. 
For asset Y, he reports a casualty loss of $1,800 and an insurance recovery of $900, resulting in a short-term capital loss of $900. 
For asset Z, he reports a casualty loss of $2,000 and an insurance recovery of $1,800, resulting in a short-term capital loss of $200. 
Therefore, the total net loss is $900 ($900 + (-$900) + (-$200) = -$900). However, since it is a personal-use property, casualty losses are deductible only to extent of gain from casualty losses, and any excess is not deductible. Thus, we have a long-term capital gain of $5,000 and a short-term capital loss of $900. The correct answer is C.

In the Current Year,Marcus Reports the Following Casualty Gains and Losses