Casualty Losses. Tony is a carpenter who owns his own furniture manufacturing business.During the current year, a tornado (a federally declared disaster) damaged several pieces ofequipment and destroyed his delivery truck and his personal automobile, which he oftenkept in the workshop garage. The asset descriptions and related values are as follows:Adjusted InsuranceBasisFMVFMVCost toBefore Casualty After Casualty Repair/Replace$ 8,7009,00013,80032,00012,000AssetProceeds$ 9,0003,00015,30017,50028,000$ 3,7007,80011,40016,00012,000$4,000Equipment AEquipment BEquipment CDelivery TruckAutomobile$12,3008,100Not Available Not Available18,00015,000Although he could not obtain its fair market value after the casualties, Tony decided torepair rather than replace Equipment C.Before considering any deductions because of these casualties, Tony's AGI is $80,000.What deductions may Tony take relating to these losses?

Calculation of deductions that Tony may take are as follows:

Answered: Before considering any deductions…

Before considering any deductions because of these casualties, Tony's AGI is $80,000. What deductions may Tony take relating to these losses?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter7: Losses—deductions And Limitations

Section: Chapter Questions

Problem 48P

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Question

Casualty Losses. Tony is a carpenter who owns his own furniture manufacturing business.
During the current year, a tornado (a federally declared disaster) damaged several pieces of
equipment and destroyed his delivery truck and his personal automobile, which he often
kept in the workshop garage. The asset descriptions and related values are as follows:
Adjusted Insurance
Basis
FMV
FMV
Cost to
Before Casualty After Casualty Repair/Replace
$ 8,700
9,000
13,800
32,000
12,000
Asset
Proceeds
$ 9,000
3,000
15,300
17,500
28,000
$ 3,700
7,800
11,400
16,000
12,000
$4,000
Equipment A
Equipment B
Equipment C
Delivery Truck
Automobile
$12,300
8,100
Not Available Not Available
18,000
15,000
Although he could not obtain its fair market value after the casualties, Tony decided to
repair rather than replace Equipment C.
Before considering any deductions because of these casualties, Tony's AGI is $80,000.
What deductions may Tony take relating to these losses?

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