In the current year, Wilson Enterprises, a calendar year taxpayer, suffers a cas
ID: 2475597 • Letter: I
Question
In the current year, Wilson Enterprises, a calendar year taxpayer, suffers a casualty loss of $145,000. How much of the casualty loss will be deductible by Wilson under the following circumstances?
Wilson is an individual proprietor and has AGI of $362,500. The casualty loss was a personal loss, and the insurance recovered was $79,750 before any limitations.
1.Wilson can claim a casualty loss as an itemized deduction of ?
2. Wilson is a corporation, and the insurance recovered was $79,750 before any limitations.
Wilson can deduct ?
Explanation / Answer
1)
Wilson can claim a casualty loss as an itemized deduction of
= ($145,000-$79750)-$100-(10%*$362500)
= $28,900
2)
Corporations are not subject to the$100 floor or the 10%-of-AGI limitation.
So Wilson can deduct
= $145,000-$79,750
= $65,250