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In 2020, Jessie's business-use equipment was damaged in a casualty. The equipment had a fair market...

In 2020, Jessie's business-use equipment was damaged in a casualty. The equipment had a fair market value of $100,000 and an adjusted basis of $70,000 before the casualty. After the casualty, the equipment was worth $60,000 Jessie's received no insurance proceeds. What is the amount of Jessie's casualty loss deduction or her casualty gain in 2020? Enter losses as a negative number and gains as a positive number.

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Answer #1

Adjusted basis of equipment= $70,000

Fair market value before the casualty = $100,000

Equipment value after the casualty = $60,000

Decrease in Fair Market value   =   $40,000

Since the decrease in Fair Value ie, $40,000, is less than the Adjusted basis of equipment i.e, $70,000. So Jessie's casualty loss deduction in 2020 will be ($40,000).

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