Question

Alona is a student, and her personal car was stolen in May 2013. It was found several days later severely damaged. The decrease in fair market value (less than her adjusted basis) was $3,500. In addition, a personal lap top computer in the car at the time was never recovered (fair market value $500, also less than her adjusted basis). What is the amount and treatment of the casualty loss after considering the $100 minimum floor, but before the AGI limitation?

A. Schedule A loss of $3,800 for the car and computer.
B. Schedule D loss of $3,500 for the car and a Schedule A loss of $500 for the computer.
C. Schedule A loss of $3,900 for the car and the computer.
D. Schedule D loss of $4,000 for the car and the computer.

Answer 1

The amount and treatment of the casualty loss after considering the $100 minimum floor but before the AGI limitation is option A. Schedule A loss of $3,800 for the car and computer.

Step-by-step explanation:

The amount and treatment of the casualty loss after considering the $100 minimum floor but before the AGI limitation is option A.

Schedule A loss of $3,800 for the car and computer.

The decrease in fair market value of the car is $3,500, and the fair market value of the laptop computer is $500, both of which are less than Alona's adjusted basis.

Therefore, Alona can claim a total casualty loss of $3,800 on Schedule A of her tax return.