Terry has a casualty gain of $1,000 and a casualty loss of $5,400 before the $10

Question

Terry has a casualty gain of $1,000 and a casualty loss of $5,400 before the $100 floor and before the adjusted gross income limitation. the gain and loss were the result of two separate casualties occurring during 2014 and both properties were personal use assets. If Terry itemizes deductions on her 2014 return and has adjusted gross income of $25,000 what is Terry's a gain or net itemized deduction as a result of these casualties?
a. $5300 itemized deduction, $1000 capital gain
b. $4300 itemized deduction
c. $1800 itemized deduction
d. $2800 itemized deduction, $1000 capital gain
e. none of the above

Explanation / Answer

Correct option is C

Deduction can be calculated as follows

Deduction = (5300 - 1000) - 10% * 25000 = 4300 - 2500 = 1800

So itemized deduction is $1800

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