Carl suffered two different casualty losses during 2015. His storage building, w
ID: 2420239 • Letter: C
Question
Carl suffered two different casualty losses during 2015.
His storage building, which he used for personal, nonbusiness purposes, was destroyed by a tornado on March 18, 2015. It was not insured. His adjusted basis in the storage building was $4,268, but it had a fair market value of $5,200 at the time of the tornado.
His car was destroyed by a flood on November 8, 2015. His adjusted basis in the car, which he used solely for personal purposes, was $18,295, but it had a fair market value of $12,300 at the time of the flood. It was not insured. His adjusted gross income for 2015 was $40,450.
What is his total itemized deduction for the casualty losses he incurred in 2015? Show all calculations.
Explanation / Answer
If your property is personal use or is not completely destroyed, the amount of your casualty loss is lesser of
The adjusted basis of your property
Or
The decrease in fair market value of your property as a result of the casualty.
Since both property of Carl
Storage building and car are used for personal purposes.
So the itemized deduction casualty losses he incurred
Storage building $ 4268
Car $ 5995