Question

Danny operates a plumbing business, and this year the three-year-old van he used in the business was destroyed in a traffic accident. The van was originally purchased for $20,000 and the adjusted basis was $5,800 at the time of the accident. Although the van was worth $6,000 at the time of accident, insurance only paid Danny $1,200 for the loss. What is the amount of Danny's casualty loss deduction?

Answer 1

Answer:

$4,600

Explanation:

Casualty loss deduction = Adjusted basis - insurance compensation = 5800-1200= $4,600