Question

Jeffry Johnson, an individual taxpayer, had his personal residence damaged by a severe thunderstorm. This same thunderstorm also caused damage to his car that was parked in his driveway. Six months later (and in the same tax year), a windstorm uprooted three trees in Jeffry's front yard. Total casualty losses (after insurance reimbursements) are as follows:

Residence damage due to thunderstorm     $2,000
Car damage due to thunderstorm              500
Tree damage due to windstorm                600

What is Jeffry's net deduction for casualty losses (before any reduction relating to adjusted gross income)?

$3,000

$0

$2,900

$2,100

Answer 1

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Answer is highlighted in yellow: Solution: Answer: $0 Explanation: Personal casualty losses deduction are eliminated. It is a deductible loss in case of loss happened in a president declared disaster area. It is not a president declared disaster area, therefore, no deduction is allowed.