Assume that the sawmill in Problem 58 was damaged by the fire but not completely destroyed. Just
Question:
Assume that the sawmill in Problem 58 was damaged by the fire but not completely destroyed. Just before the fire the sawmill had a fair market value of \(\$ 50,000\) and immediately after the fire its fair market value was \(\$ 3,500\).
a. Under these facts, John's loss is limited to how much?
b. Had the fair market value of the sawmill been \(\$ 80,000\) just before the fire and \(\$ 10,000\) just afterward, how much is John's deductible casualty loss?
Problem 58
John Henderson's portable sawmill was completely destroyed by a fire and he carried no insurance on the property. The adjusted basis for depreciation of the sawmill building and equipment at the time of the fire was \(\$ 65,000\), and its fair market value was \(\$ 50,000\). The value of the equipment after the fire was only scrap value, amounting to \(\$ 200\). How much is Mr. Henderson's deductible casualty loss?
Step by Step Answer:
CCH Federal Taxation 2019 Comprehensive Topics
ISBN: 9780808049081
2019 Edition
Authors: Ephraim P. Smith, Philip J. Harmelink, James R. Hasselback