On November 1 of the current year Sam Smith dropped
On November 1 of the current year, Sam Smith dropped off to sleep while driving home from a business trip. Luckily, he was only slightly injured in the resulting accident, but the company car that he was driving was damaged significantly.
Sam is an employee of Snipe Industries. The corporation purchased the car new two years ago for $40,000. The automobile had a fair market value of $30,000 before the accident and $12,000 after the accident. The car was covered by an insurance policy that had a $3,000 deductible clause. The corporation is afraid that the policy will be canceled if it makes a claim for the damages. Therefore, Snipe is considering not filing a claim. The company believes that the casualty loss deduction will help mitigate the loss of the insurance reimbursement. The corporation's taxable income for the current year is $25,000.
Write a letter to Snipe Industries that contains your advice regarding the filing of an insurance claim for reimbursement for the damages to the company's car. Snipe Indus tries' address is 450 Colonel's Way, Warrensburg, MO 64093.
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