When a nonbusiness casualty loss is spread between two taxable years, the loss in the second year is reduced by 10% of adjusted gross income for the first year.

Question

Quizplus · Accepted Answer

Nonbusiness casualty losses are subject to a 10% of adjusted gross income (AGI) threshold before they can be deducted on a tax return. However, if the loss is spread between two taxable years, the loss in the second year is not automatically reduced by 10% of AGI from the first year. Instead, the taxpayer must recalculate the 10% threshold for the second year based on the adjusted gross income for that year.

When a Nonbusiness Casualty Loss Is Spread Between Two Taxable