Olaf lives in the state of Minnesota. A tornado hit the area and damaged his home and automobile. Applicable information is as follows:

Because of the extensive damage caused by the tornado, the President designated the area a disaster area.

Olaf and his wife, Anna, always file a joint return. Their 2015 tax return shows AGI of $180,000 and taxable income of $140,000. In 2016, their return shows AGI of $300,000 and taxable income (exclusive of the casualty loss deduction) of $215,000.

Determine the amount of Olaf and Anna’s loss and the year in which they should take the loss.

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Item Home Auto Adjusted Basis $350,000 60,000 FMV before $500,000 40,000 FMV after $100,000 10,000 Insurance Proceeds $280,000 20,000