Assume you are an accountant in the tax department of Rubley, Musgrave, and Elway, CPAs. Last Saturday morning, you were in Winchell's Donuts, as is your norm. Just as you finish reading Doonesbury and start on your second apple fritter, a gentleman sits down beside you. He introduces himself as Fred O. McDonald, a farmer from Wiggins. He says he recognizes you as "that CPA who frequents the donut shop." Fred has a problem and asks you for tax advice. Last Tuesday, farmer McDonald planned to remove stumps from a pasture. So, he drove out to the pasture, lit a stick of dynamite, and tossed it near the base of a stump. Fred's playful dog Boomer saw his master throw the "stick" and scampered to fetch it. As Boomer picked up the stick, Fred yelled at the dog. Boomer, thinking he was going to be punished, ran under Fred's pickup truck where he dropped the dynamite stick. The dog escaped harm just as the truck was totally destroyed by the blast. Fred wonders if he can deduct the loss of the truck for tax purposes.

Draft a letter to Fred O. McDonald to answer his question.