38. LO.3, 4, 8 Olaf lives in the state of Minnesota. A tornado hit the area and damaged his home and automobile. Applicable information is as follows:

Item Adjusted Basis FMV before FMV after Insurance Proceeds Home $350,000 $500,000 $100,000 $280,000 Auto 60,000 40,000 10,000 20,000 Because of the extensive damage caused by the tornado, the President designated the area a disaster area.

Olaf and his wife, Anna, always file a joint return. Their return for last year shows AGI of $180,000 and taxable income of $140,000. For the current year, their return shows AGI of $300,000 and taxable income (exclusive of the casualty loss deduction) of

$215,000.

Determine the amount of Olaf and Anna’s loss and the year in which they should take the loss.