Question

In 2019, Grant's personal residence was completely destroyed by fire. He was insured for 100% of his actual loss, and he received the insurance settlement. Grant had adjusted gross income before considering the casualty item of $30,000. Pertinent data with respect to the residence follows: Cost basis $280,000 Value before casualty 250,000 Value after casualty –0– What is Grant's allowable casualty loss deduction?

a. $10,000
b. $6,500
c. $6,900
d. $0
e. $80,000

Answer 1

D) $0

Step-by-step explanation:

The insurance company paid $250,000 to Grant to cover the loss of his house and that amount was 100% of the fair market value of the house. To calculate any casualty gain or casualty loss the money received form the insurance company should have been either larger or smaller than the fair market value of the house.