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Riley 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 $21,000 and the adjusted basis was $5,675 at the time of the accident. Although the van was worth $6,100 at the time of accident, insurance only paid Riley $1,325 for the loss. What is the amount of Riley's casualty loss deduction

Sagot :

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Answer:

$4,350

Explanation:

Calculation to determine the amount of Riley's casualty loss deduction

Using this formula

Casualty loss deduction=Adjusted basis - insurance reimbursement

Let plug in the formula

Casualty loss deduction=($5,675 − $1,325)

Casualty loss deduction=$4,350

Therefore the amount of Riley's casualty loss deduction is $4,350

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