Question

Mary suffers $25,000 in uninsured losses in 2019 when her house burns down while she was on vacation. This loss was not due to a Federally declared disaster, therefore Mary can deduct what amount of the casualty losses relating to her home on her Federal income tax return

Answer 1

Answer:

$0

Explanation:

The Tax Cuts and Jobs Act eliminated the possibility of deducting casualty losses if they were not caused by federally declared natural disasters. The only way Mary could deduct the $25,000 loss is that she had some type of casualty gain during the year that is offset by this loss. Casualty gains result when a person receives more money from an insurance company due to an event, e.g. fire, than the basis of the property. But in this case, there is no prior casualty gain, so the casualty loss cannot be deducted.