Calculate the amount of the loss deductible by Derrick

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Reference no: EM132473079

Problem - Derrick owns a farm in eastern North Carolina. A hurricane hit the area (a national disaster area was declared) and destroyed a farm building and some farm equipment and damaged a barn.

Item

Adj Basis

FMV Before Damage

FMV after Damage

Ins. Proceeds

Building

$123,300

177,000

0

69,600

Equipment

80,200

55,900

0

19,600

Barn

122,700

197,700

122,700

57,900

Due to the extensive damage throughout the area, the president of the United States declared all areas affected by the hurricane as a disaster area. Derrick, who files a joint return with his wife, had $57,000 of taxable income last year. Their taxable income for the current year is $186,000, excluding the loss from the hurricane.

Required -

1. Calculate the amount of the loss deductible by Derrick and his wife?

2. What amount of loss should be adjusted against current and last year?

Reference no: EM132473079

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