Jim was in an auto accident this year. Jim paid $2,450 to repair his car after the accident and his insurance only reimbursed him $400. Jim bought his car several years ago for $1,500. What is the amount of casualty loss from this accident before Jim applies any casualty loss floor limitations?
A) $2,450
B) $2,050
C) $1,500
D) $1,100
E) None of these is correct.

Question

Quizplus · Accepted Answer

The casualty loss is calculated as the lesser of the decrease in fair market value or the adjusted basis of the property, minus any insurance reimbursement. Jim's adjusted basis is $1,500, and he was reimbursed $400, so the casualty loss is $1,500 - $400 = $1,100.

Jim Was in an Auto Accident This Year