D purchased a personal residence in Los Angeles three years ago for $200,000 and insured it for that amount.Its fair market value this year was $300,000.This year the house burned down.The insurer paid the insured value of $200,000 in full.D's A.G.I.is $25,000.Assuming she has no capital gains or other losses for the year, what amount may she deduct?

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Quizplus · Accepted Answer

The deductible casualty loss is the lesser of the decline in value or the adjusted basis, reduced by insurance reimbursement, a $100 floor, and 10% of AGI. Here, the loss is $200,000 (adjusted basis), minus $200,000 (insurance), minus $100, minus $2,500 (10% of AGI), resulting in $0 deductible.

D Purchased a Personal Residence in Los Angeles Three Years