In 2016,Morley,a single taxpayer,had an AGI of $30,000 before considering the following items:
Loss from damage to rental property
($6,000)
Loss from theft of bonds
(3,000)
Personal casualty gain
4,000
Personal casualty loss (after $100 floor)
(9,000)

Determine the amount of Morley's itemized deduction from the losses.

Question

In 2016,Morley,a single taxpayer,had an AGI of $30,000 before considering the following items:
Loss from damage to rental property
($6,000)
Loss from theft of bonds
(3,000)
Personal casualty gain
4,000
Personal casualty loss (after $100 floor)
(9,000)
​
Determine the amount of Morley's itemized deduction from the losses.

Quizplus · Accepted Answer

The correct answer is D. Morley's itemized deduction from the losses is $5,600. This is calculated by taking the total of the losses ($6,000 + $3,000 + $9,000 = $18,000) and subtracting the personal casualty gain ($4,000). The result is $14,000. However, the itemized deduction for casualty losses is limited to the amount of the loss that exceeds 10% of the taxpayer's AGI. In this case, 10% of Morley's AGI is $3,000. Therefore, the itemized deduction for casualty losses is limited to $14,000 - $3,000 = $11,000. However, the theft loss is not a casualty loss, so it is not subject to the 10% of AGI limitation. Therefore, the total itemized deduction from the losses is $11,000 + $3,000 = $14,000.

In 2016,Morley,a Single Taxpayer,had an AGI of $30,000 Before Considering