Income tax return question.?

In 2010, Wally had the following insured personal casualty losses (arising from one casualty). Wally also had $48,000 AGI for the year. Fair Market ValueInsurance Asset A, Adjusted 9,200$ Basis 8,000 Before 1,000 After Recovery 2,000 Asset B Adjusted 3,000 Basis 4000 Before 0 After Recovery 500 Asset C Adjusted 3700 Basis 1900 Before 0 After Recovery 800 Wally’s casualty loss deduction is: a.$4,100. b.$4,500. c.$8,600. d.$9,500. e.None of the above.

Written by Franek F in United States

Better Answer

A: 8,000 - 1,000 - 2,000 = 5,000
B: 4,000 - 0 = 4,000 but limited to basis, so only 3,000 - 500 = 2,500
C: 1,900 - 0 - 800 = 1,100

5,000 + 2,500 + 1,100 - 100 = 8,500

48,000 x 10% = 4,800
8,500 - 4,800 = 3,700

answer: e (3,700)

Written by Michael Plaks

Other Answers

A: 8,000 - 1,000 - 2,000 = 5,000
B: 4,000 - 0 = 4,000 but limited to basis, so only 3,000 - 500 = 2,500
C: 1,900 - 0 - 800 = 1,100

5,000 + 2,500 + 1,100 - 100 = 8,500

48,000 x 10% = 4,800
8,500 - 4,800 = 3,700

answer: e (3,700)

Written by Michael Plaks