A tornado damaged Louise\'s home on August 17, this year. To restore the destroy

Question

A tornado damaged Louise's home on August 17, this year. To restore the destroyed property she paid the following amounts: $80,000 to repair the damage to the house. The house originally cost $70,000 and was worth approximately $90,000 at the time of the tornado. Louise filed a claim with her insurance company and received $65,000. She has AGI of $30,000.

The measure of the loss as the starting point of the calculation is

If this is a personal casualty loss (as distinguished from a business casualty loss), the loss to be deductible must exceed (in addition to what a business loss would need to exceed):

For any of Louise's loss to be deductible it must be greater than:?

Louise's deductible loss is:

If the tornado also caused $2,000 damage to Louise's furniture and all other facts remained the same, the amount of Louise's deductible casualty loss would be:?

Explanation / Answer

Original Cost = $70000

Additional Damage Cost = $80000

Claim Received= $65000

Additional Claim = $2000

Total Claim Received = $65000+$2000 = $67000

Net Loss Deductible = $80000-$67000 = $13000

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