Tania is a retiree living off of social security and spends her days on her house boat floating up and down the Sacramento River. One day in 2017, Tania heard a loud noise and it appeared something had struck her boat. As she peaked her head out the window a man dressed in a pirate outfit yells Sorry about that, I was testing out my new cannon ball and accidently struck your boat. Tanias boat ended up sinking to the bottom of the river. When it comes to determining Tania's deductible loss for her boat the first step is to determine the lesser of these two things.

a) Adjusted Basis, Insurance

b) FMV before event-FMV after event,

c) Adjusted Basis FMV before event-FMV after the event,

d) Insurance Original Cost, Adjusted Basis