A fire destroyed business equipment that was worth $100,000 and had a $118,100 adjusted tax basis. The equipment was uninsured. The owner can recognize a $118,100 ordinary casualty loss.

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Since the equipment was uninsured, the owner can recognize a casualty loss deduction for the adjusted tax basis of $118,100. However, if the equipment was insured, the loss would be limited to the amount not covered by insurance.

A Fire Destroyed Business Equipment That Was Worth $100,000 and Had