Stella owns a taxicab company. During the year, two of her cabs are involved in accidents. One

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Stella owns a taxicab company. During the year, two of her cabs are involved in accidents. One is totally destroyed; the other is heavily damaged. Stella is able to replace the destroyed cab with an identical model for $5,500. Her adjusted basis in the destroyed cab is $3,750, and the insurance company pays her $2,800. The adjusted basis of the damaged cab is $3,800. The insurance adjuster estimates that the damaged cab is worth $3,600. Although a comparable cab sells for $7,800, the insurance company gives Stella only $2,900. Write a letter to Stella explaining the amount of her deductible casualty loss.


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Concepts In Federal Taxation

ISBN: 9780324379556

19th Edition

Authors: Kevin E. Murphy, Mark Higgins, Tonya K. Flesher

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