Alicia was involved in an automobile accident in 2017. 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

Quizplus · Accepted Answer

The deductible portion of the casualty loss is $100. The amount of the loss is $20,000 - $8,000 = $12,000. The business use portion of the loss is $12,000 * 60% = $7,200. The deductible portion of the business use loss is $100. The itemized deduction for the casualty loss is $7,200 - $100 = $7,100.

Alicia Was Involved in an Automobile Accident in 2017