F's furniture business suffered a substantial property loss due to a recent earthquake.F's insurance policy did not provide coverage for damage by an earthquake.The property, which was totally worthless after the quake, had been worth $60,000 (basis $20,000).F's A.G.I.this year before the casualty is $90,000.F is provided some relief from his misfortune in that he may deduct
A)$10,900
B)$11,000
C)$20,000
D)$60,000

Question

Quizplus · Accepted Answer

F can deduct the lesser of the property's adjusted basis ($20,000) or the decrease in fair market value ($60,000) due to the casualty. Since the property is totally worthless, the decrease in value is $60,000, but the deduction is limited to the basis of $20,000.

F's Furniture Business Suffered a Substantial Property Loss Due to a Recent