Question

Can someone please tell me the answer Federal Income Tax Accounting

Compare and contrast the computational rules for deducting casualty losses on personal-use property with casualty losses incurred on business or investment property. O A. The casualty loss deduction on personal-use property is maxed out at the greater of (1) basis or (2) 10% of AGI. This applies to partially destroyed property. Casualty loss deductions on personal-use property where the property is totally destroyed is limited to the lesser of (1) basis or (2) total property damage amount. The casualty loss deduction on partially destroyed business or investment property is equal to the basis of the property. The amount of the casualty loss deduction for totally destroyed business or investment property is limited to the lesser of (1) basis or (2) total property damage amount. Casualty losses on business property are never subject to overall limits or floors. O B. The casualty loss deduction on personal-use property is limited to the lesser of (1) the taxpayer's basis in the property or (2) the reduction in fair market value. This is the case whether the property is totally or partially destroyed. Casualty losses on personal-use property are reduced by $100 per casualty and then are further reduced by 10% of AGI. The casualty loss deduction on partially destroyed business or investment property is limited to the lesser of (1) basis or (2) reduction in FMV. The amount of the casualty loss deduction for the total destruction of business or investment property is equal to the basis of the property. Casualty losses on business property are not subject to limits and floors. O C. The casualty loss deduction on personal-use property is maxed out at the greater of (1) the taxpayer's basis in the property or (2) the total property damage amount. This applies to property that is totally destroyed. Casualty loss deductions on personal-use property where the property is partially destroyed is equal to the basis of the property. The casualty loss deduction on partially destroyed or totally destroyed business or investment property is limited to the greater of (1) the total property damage amount or (2) the reduction of the fair market value. Casualty losses on business or investment property are further reduced by the greater of $100 per casualty or 10% of AGI O D. The casualty loss deduction on personal-use property is limited to the lesser of (1) the taxpayer's basis in the property or (2) the total property damage amount. This is the case whether the property is totally or partially destroyed. Casualty losses on personal-use property are reduced by the greater of $100 per casualty or 10% of AGI. The casualty loss deduction on partially destroyed or totally destroyed business or investment property is maxed out at the greater of (1) the taxpayer's basis in the property or (2) the total property damage amount. Casualty losses on business or investment property are subject to a 10% limit of AGI.

Answer 1

Answer -

The computational rules for deducting casualty losses on Personal-use property and casualty losses incurred on Business or Investment property.​​​​​​

(I) - On Personal-use property -

Casualty and theft losses are reported under the casualty loss section on Schedule A of Form 1040.

They are subject to a 10% of AGI , as well as a $100 reduction per loss.

.

(II) - On Business or Investment property -

If property isn't completely destroyed, casualty loss deduction is lesser of -

• The difference between the property's fair market value before and after the casualty; or
• The adjusted basis of the property.

.

Therefore, Option - (B) is Correct.