Question

In 2018, Morley, a single taxpayer, had an AGI of $30,000 before considering the following items: Loss from damage to rental property ($6,000) Loss from theft of bonds (3,000) Personal casualty gain 4,000 Personal casualty loss (after $100 floor) (9,000) The personal casualties occurred in a Federally-declared disaster area. Determine the amount of Morley's itemized deduction from the losses.

(A) $2,900
(B) $5,600
(C) $5,120
(D) $0
(E) None of these choices are correct.

Answer 1

Option (B) $5,600

Step-by-step explanation:

AGI before casualties $30,000

rental property loss 6,000

personal casualty gain $4,000

personal casualty loss 4,000

Adjusted gross income $24,000

itemized deductions

casualty loss ($9,000 - $4000) - (10% x $24,000) $2,600

miscellaneous itemized deductions 3,000

Total itemized deductions $5,600