Question

Nicole has a weekend home on Pecan Island that she purchased in 2005 for $250,000. Recently, the home was appraised at $260,000. After the appraisal, a hurricane hit Pecan Island, severely damaging Nicole’s home. An appraisal placed the value of the home at $140,000 after the hurricane. Because of its prohibitive cost, Nicole had no hurricane insurance. Before any reductions or limitations, Nicole’s casualty loss amount is Group of answer choicesA) $0.B) $10,000.C) $120,000.D) $140,000.

Answer 1

The correct option is C,$120,000

Step-by-step explanation:

The casualty loss can be computed by comparing the value of the of Nicole weekend home just before the casualty and immediately after it had occurred.

The value of the weekend home before the eventuality was $260,000(recent appraisal value).

Besides, the value of the weekend home after the hurricane is $140,000,hence the diminution is $120,000($260,000-$140,000),as a result the casualty loss is $120,000