Heather owns a two-story building. The building is used 40% for business use and 60% for personal use. During 2022, a fire caused major damage to the building and its contents. Heather purchased the building for $800,000 and has taken depreciation of $100,000 on the business portion. At the time of the fire, the building had a fair market value of $900,000. Immediately after the fire, the fair market value was $200,000. The insurance recovery on the building was $600,000. The contents of the building were insured for any loss at fair market value. The business assets had an adjusted basis of $220,000 and a fair market value of $175,000. These assets were totally destroyed. The personal use assets had an adjusted basis of $50,000 and a fair market value of $65,000. These assets were also totally destroyed. If an amount is zero, enter "0". a. Determine the business and personal gain or loss in regard to the building and its contents. Total Business Portion Cost of building $800,000 320,000 Personal Portion 480,000 Less: Depreciation (100,000) 100,000 0 Adjusted basis $700,000 220,000 480,000 Decline in FMV $700,000 280,000 420,000 Business Portion Personal Portion Loss on building (lesser of basis or 220,000 420,000 decline in FMV) Less: Insurance reimbursement 240,000 360,000 Gain on business portion 20,000 Loss on personal portion 60,000 Loss on business contents 220,000 Less: Insurance recovery 175,000 Loss on business contents 45,000 Loss on personal contents Less: Insurance recovery Gain on personal contents X X b. Heather's AGI is $100,000 before considering the effects of the fire. Determine her itemized deduction and AGI after considering the effects of the fire. Adjusted Gross Income AGI before the effects of the fire $100,000 Business gain building 20,000 Business loss contents 45,000) Net business casualty loss 25,000 ) Personal casualty gain Personal casualty loss to extent of gain 15,000 15,000 ) Net personal casualty gain 0 AGI 75,000 Itemized Deduction Balance of personal casualty loss. X