Mr.and Mrs.King had only one casualty loss this year.A tornado severely damaged their home,decreasing its value by $70,000.The couple received a $48,000 reimbursement from their insurance company.Compute the Kings' itemized deduction for casualty losses if their AGI was $98,200.

Question

Quizplus · Accepted Answer

To calculate the itemized deduction for casualty losses, we need to follow the following steps:

1. Subtract the reimbursement amount from the decrease in the property value:
$70,000 - $48,000 = $22,000

2. Subtract $100 and 10% of AGI from the result above:
$22,000 - $100 - 10%*$98,200 = $12,080

Therefore, the Kings' itemized deduction for casualty losses is $12,080 (choice C).

MrAnd MrsKing Had Only One Casualty Loss This Year