Jack Jones has the following casualty gains and losses in 2012: (a) gain on the destruction by ﬁre of hardware store-$10,000; (b) loss on destruction by hurricane of residential rental property-$15,000; and (c) loss on theft of diamonds purchased for investment-$5,000. All of the assets were held for more than one year. Sam should report:

Question

Quizplus · Accepted Answer

$5,000 ordinary loss and $5,000 itemized deduction, subject to the 10% of adjusted gross income limitation. Since the netting of business casualty gains and losses resulted in a net loss of $5,000 ($10,000 − $15,000), it is ordinary. the loss on the diamonds is claimed as an itemized deduction, subject to the 10% of adjusted gross income limitation.

Jack Jones Has the Following Casualty Gains and Losses in 2012