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Casualty Losses: Year of Deduction. Jerry sprayed all of the landscaping around his business with a pesticide in June 2 0 2 3 . Shortly

Casualty Losses: Year of Deduction. Jerry sprayed all of the landscaping around his business
with a pesticide in June 2023. Shortly thereafter, all of the trees and shrubs unaccountably
died. The FMV and the adjusted basis of the plants were $15,000. Later that year, the pesti-cide manufacturer announced a recall of the particular batch of pesticide that Jerry used. It
also announced a program whereby consumers would be repaid for any damage caused by
the improper mixture. Jerry is single and reports $38,000 AGI in 2023 and $42,000 in 2024.
a. Assume that in 2023 Jerry files a claim for his losses and receives notification that pay-ment of $15,000 will be received in 2024. Jerry receives full payment for the damage in
2024. How should the loss and the reimbursement be reported?
b. How will your answer to Part a change if in 2024 the manufacturer files for bank-ruptcy and Jerry receives $1,500 in total and final payment for his claim?
c. How will your answer to Part a change if the announcement and the reimbursement do
not occur until late in 2024, after Jerry has already filed his tax return for 2023?

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