Lena owns a restaurant which was damaged by a tornado.The following assets were partially destroyed: Lena has AGI of $50,000.What is the amount of Lena's deductible casualty loss?

Question

Lena owns a restaurant which was damaged by a tornado.The following assets were partially destroyed:  Lena has AGI of $50,000.What is the amount of Lena's deductible casualty loss?

Quizplus · Accepted Answer

The deductible casualty loss is calculated as the lesser of the decline in the property's fair market value or the adjusted basis of the property. Without information on the fair market value or adjusted basis of the property, we can assume that the cost of the assets is the adjusted basis. The total cost of the assets is $60,000, which is greater than Lena's AGI of $50,000. Therefore, Lena's deductible casualty loss is $50,000.

Lena Owns a Restaurant Which Was Damaged by a Tornado