Leonard owns a hotel which was damaged by a hurricane.The hotel had an adjusted basis of $1,000,000 before the hurricane.A recent appraisal determined that the hotel's FMV was $1,500,000 before the hurricane and $700,000 afterwards.Leonard received insurance proceeds of $500,000.His AGI is $60,000.What is the amount of his deductible casualty loss?

Question

Quizplus · Accepted Answer

The deductible casualty loss is calculated as the lesser of the decrease in FMV ($800,000) or the adjusted basis ($1,000,000), minus insurance proceeds ($500,000), minus 10% of AGI ($6,000), resulting in $300,000.

Leonard Owns a Hotel Which Was Damaged by a Hurricane