In the current year, Juan's home was burglarized.He had the following items stolen: ∙ Securities worth $25,000.Juan purchased the securities four years ago for $20,000.
∙ New tools that Juan had purchased two weeks earlier for $8,000.He uses the tools in making repairs at an apartment house that he owns and manages.
∙ An antique worth $15,000.Juan inherited the antique (a family keepsake) when the property was worth $11,000.
Juan's homeowner's policy had a $50,000 deductible clause for thefts.If his salary for the year is $50,000, determine the amount of his itemized deductions as a result of the theft.

Question

Quizplus · Accepted Answer

Theft losses of personal-use property are deductible as itemized deductions only to the extent that they exceed $100 per event and are also subject to a 10% of adjusted gross income (AGI) limitation. However, the Tax Cuts and Jobs Act (TCJA) of 2017 suspended miscellaneous itemized deductions and personal casualty and theft losses, except for those attributable to a federally declared disaster, for tax years 2018 through 2025. Since Juan's salary is $50,000, and assuming this is his AGI, none of the losses due to the theft would be deductible because of the $50,000 deductible clause in his homeowner's policy and the current tax law restrictions. Additionally, the specific items stolen and their values do not impact the deductibility under the current tax law for the year in question.

In the Current Year, Juan's Home Was Burglarized