4. Heather owns a two-story building. The building is 40% business and 60% personal use. During...

 

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4. Heather owns a two-story building. The building is 40% business and 60% personal use. During the current year, a fire caused major damage to the building and its contents. Heather purchased the building for $800,000 and has taken depreciation of 100,000 on the business portion. At the time of the fire, the building had a fair market value of $900,000. Immediate after the fire the fair market value was $200,000. The insurance recovery on the building was $600,000. The contents of the building were insured for any loss at market value. The business assets had an adjusted basis of $220,000 and a fair market value of $175,000. These assets were totally destroyed. The personal use assets had an adjusted basis of $50,000 and a fair market value of $65,000. These assets were also totally destroyed. Heather's AGI prior to considering the casualties is $100,000. a. What is the amount of Heather's casualty loss? b. What is the amount of the portion of the casualty gain or loss. allocated to her business? c. What is the amount of her personal casualty loss deduction and is it deductible? 4. Heather owns a two-story building. The building is 40% business and 60% personal use. During the current year, a fire caused major damage to the building and its contents. Heather purchased the building for $800,000 and has taken depreciation of 100,000 on the business portion. At the time of the fire, the building had a fair market value of $900,000. Immediate after the fire the fair market value was $200,000. The insurance recovery on the building was $600,000. The contents of the building were insured for any loss at market value. The business assets had an adjusted basis of $220,000 and a fair market value of $175,000. These assets were totally destroyed. The personal use assets had an adjusted basis of $50,000 and a fair market value of $65,000. These assets were also totally destroyed. Heather's AGI prior to considering the casualties is $100,000. a. What is the amount of Heather's casualty loss? b. What is the amount of the portion of the casualty gain or loss. allocated to her business? c. What is the amount of her personal casualty loss deduction and is it deductible?

Answer rating: 100% (QA)

Answer Explanation i The amount of Heathers casualty loss i... View the full answer