Question

In 2013, Jorge's pleasure boat was destroyed by a flood. He had purchased the boat in 2010 for $30,000. His insurance policy had lapsed at the time of the flood. On what form(s) will Jorge report this loss?

A. Schedule A, Itemized Deductions, and Form 4684, Casualties and Thefts
B. Schedule D, Capital Gains and Losses, and Form 4684, Casualties and Theft
C. Schedule D, Capital Gains and Losses, and Form 4797, Sales of Business Property and Involuntary Conversions
D. On the first page of Form 1040

Answer 1

Jorge should report the destruction of his pleasure boat by reporting the loss on Form 4684 and carrying it to Schedule A, Itemized Deductions, if he itemizes.

Step-by-step explanation:

The question addresses how an individual should report a personal casualty loss on their federal tax return. In this scenario, Jorge needs to report the destruction of his pleasure boat by a flood in the appropriate tax forms.

Since his insurance policy had lapsed and assuming the tax law applicable in the year the question refers to allows for personal casualty deductions, Jorge would report this loss on Form 4684, Casualties and Thefts, to compute the loss, then carry it to Schedule A, Itemized Deductions, if he is itemizing his deductions.

The loss would not be reported on Schedule D as it is not related to capital gains and losses or on Form 4797 as it is not business property. Additionally, the first page of Form 1040 is generally not used for detailed reporting of such losses.