Don operates a taxi business, and this year one of his taxis was damaged in a traffic accident. The taxi was originally purchased for $32,000 and the adjusted basis was $2,000 at the time of the accident. The taxi was repaired at a cost of $2,500 and insurance reimbursed Don $700 of this cost. What is the amount of Don's casualty loss deduction?

Question

Quizplus · Accepted Answer

Lesser of adjusted basis or decline in value (repair cost) less insurance reimbursement (Lesser of $2,500 or $2,000 = $2,000 − $700 = $1,300).

Don Operates a Taxi Business, and This Year One of His