Question

In the current year, Wilson Enterprises, a calendar year taxpayer, suffers a casualty loss of $90,000. The casualty was attributable to a Federally declared disaster. How much of the casualty loss will be deductible by Wilson under the following circumstances?

Required:
a. Wilson is an individual proprietor and has AGI of $225,000. The casualty loss was a personal loss, and the insurance recovered was $50,000 before any limitations. Wilson can claim a casualty loss as an itemized deduction of $_________
b. Assume Wilson is a C corporation, and the insurance recovered was $50,000 before any limitations Wilson can deduct $________

Answer 1

Answer:

Items                                                      Amount

a. Loss                                                    90000

Less: Insurance Recovery                     50000

Loss after Insurance reimbursement   40000

Less : Single event Deduction              100    

Loss after $ 100 rule                              39900

Less: 10%*225000(AGI)                         22500

Casualty loss deduction                        $17,400

So, the casualty loss deductible by Wilson = $17,400

b. Wilson is a corporation, and the insurance recovered was $50,000. As the casualty loss is a personal loss, no deduction is available to Wilson Corporation . So,casualty loss deductible by Wilson = $0.