Question
A flood completely destroyed Mr. and Mrs. Washingtons home on November 30 of 2018. The home was located in a federally declared disaster area. They
A flood completely destroyed Mr. and Mrs. Washingtons home on November 30 of 2018. The home was located in a federally declared disaster area. They claimed the loss on their current-year tax return. Based on the following facts, what is the amount of loss Mr. and Mrs. Washington can deduct for 2018?
Basis (contents not considered for this purpose) $110,000
Fair market value before flood 150,000
Fair market value after flood 30,000
Insurance reimbursement received
February 15 of the following year 80,000
Replacement February 1 of the following
year (property provided under disaster
relief programs of government agencies) 8,000
Adjusted gross income for the current year 40,000
A. $0
B. $17,900
C. $27,900
D. $35,900
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