e. Larry's personal yacht was stolen on September 5. The yacht had been purchased in August at a cost of $25,000. The fair market value immediately preceding the theft was $19,600. Larry was insured for 50% of the original cost, and he received $12,500 on December 1.

There is a tax loss (before any AGI limitations) of $ that is treated as nondeductible personal casualty loss .

It is not 7000 or 12500