Alicia was involved in an automobile accident in 2014.Her car was used 60% for business and 40% for personal use.The car had originally cost $40,000.At the time of the accident,the car was worth $20,000 and Alicia had taken $8,000 of depreciation.The car was totally destroyed and Alicia had let her car insurance expire.If Alicia's AGI is $50,000 (before considering the loss),determine her itemized deduction for the casualty loss.

Question

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Business Use Personal Use
Cost $24,000 $16,000
Less: depreciation (8,000)-0-
Basis $16,000 $16,000
Fair market value $12,000 $ 8,000
Loss $16,000 $ 8,000
AGI before casualty loss $50,000
Less: Business loss (16,000)
AGI $34,000
Personal casualty loss $ 8,000
Less: $100 floor (100)
10% of AGI (10% × $34,000)(3,400)
Itemized deduction $ 4,500

Alicia Was Involved in an Automobile Accident in 2014