B's antique furniture, which cost her $5,000 and was worth $10,000, was completely destroyed by a burglar.She carried no insurance.B's A.G.I.for the year was $20,000.How would this loss affect B's adjusted gross income (A.G.I.)?

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Quizplus · Accepted Answer

The loss is calculated as the lesser of the decrease in fair market value ($10,000) or the adjusted basis ($5,000). The deductible loss is reduced by $100 and then by 10% of the AGI ($2,000), resulting in a decrease of $2,900 in AGI.

B's Antique Furniture, Which Cost Her $5,000 and Was Worth