Question

Don operates a taxi business, and this year one of his taxis was damaged in a traffic accident. The taxi was originally purchased for $15,500 and the adjusted basis was $1,050 at the time of the accident. The taxi was repaired at a cost of $2,975 and insurance reimbursed Don $757 of this cost. What is the amount of Don's casualty loss deduction

Answer 1

Answer:

$293

Explanation:

Calculation for the amount of Don's casualty loss deduction

Using this formula

Casualty loss deduction amount=Adjusted basis -Insurance reimbursed

Let plug in the formula

Casualty loss deduction amount=$1,050- $757

Casualty loss deduction amount=$293

Therefore the amount of Don's casualty loss deduction will be $293