Derrick owns a farm in eastern North Carolina. A hurricane hit the area $($a national disaster area was declared$)$ and destroyed a farm building and some farm equipment and damaged a barn.

ItemAdjusted BasisFMV before DamageFMV after DamageInsurance ProceedsBuilding$ $134,700$$ $192,900$$ $0$$ $76,500$Equipment$89,60070,600022,400$Barn$141,000206,900141,00058,500$

Due to the extensive damage throughout the area, the president of the United States declared all areas affected by the hurricane as a disaster area. Derrick, who files a joint return with his wife, had $$46,200$ of taxable income last year. Their taxable income for the current year is $$153,600,$ excluding the loss from the hurricane.