Problem 8-19 (Algorithmic) Capital Gains and Casualty Gains and Losses (LO 8.9) An office machine used by Josie in her accounting business was completely destroyed by fire. The adjusted basis of the machine was $36,850 (original basis of $55,275 less accumulated depreciation of $18,425). The machine was not insured. Calculate the amount and nature of Josie's gain or loss as a result of this casualty. (Assume this is the taxpayer's only casualty gain or loss.) Amount of gain or loss: $ 8,000 X Capital gain X Feedback Check My Work The treatment of casualty gains and losses differs depending on whether the property involved is personal use, business, or investment property. Gains and losses arising from a casualty or theft of property used in a trade or business or held for investment are treated differently fro gains and losses arising from a casualty or theft of personal-use property. Business and investment property must be identified as a cap asset, trade or business property subject to an allowance for depreciation, or ordinary income property. The basis of the property is used as a starting point for determining the deductible loss. All casualty and theft losses are reduced by am of insurance proceeds