This year Amy purchased $2,200 of equipment for use in her business. However, th

Question

This year Amy purchased $2,200 of equipment for use in her business. However, the machine was damaged in a traffic accident while Amy was transporting the equipment to her business. Note that because Amy did not place the equipment into service during the year, she does not claim any depreciation expense for the equipment.

Deductible Amount:

This year Amy purchased $2,200 of equipment for use in her business. However, the machine was damaged in a traffic accident while Amy was transporting the equipment to her business. Note that because Amy did not place the equipment into service during the year, she does not claim any depreciation expense for the equipment.

Explanation / Answer

For partial destruction of a business asset, Amy can claim a casualty loss deduction for the lesser of the economic loss (the cost of repair) or the tax basis of the machine. In this case Amy can deduct $2,200

Deductible Amount: $2,200

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