In the current year,Marcus reports the following casualty gains and losses on personal-use property.Assets X and Y are destroyed in the first casualty while Z is destroyed in a second casualty. As a result of these losses and insurance recoveries,Marcus must report

Question

In the current year,Marcus reports the following casualty gains and losses on personal-use property.Assets X and Y are destroyed in the first casualty while Z is destroyed in a second casualty.  As a result of these losses and insurance recoveries,Marcus must report

Quizplus · Accepted Answer

Personal-use property losses are reported as capital losses on Schedule D of Form 1040. Since asset X was held for more than one year, its loss is a long-term capital loss. Since assets Y and Z were held for one year or less, their losses are short-term capital losses. The insurance recoveries reduce the amount of the losses, but they are not treated as gains. Therefore, the net result is a long-term capital gain of $5,000 on asset X and short-term capital losses of $900 and $200 on assets Y and Z, respectively.

In the Current Year,Marcus Reports the Following Casualty Gains and Losses