Determine the amount of Olaf and Anna loss

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Problem - Olaf lives in the state of Minnesota. In 2019, a tornado hit the area and damaged his home and automobile. Applicable information is as follows:

Item

Adjusted Basis

FMV before

FMV after

Insurance Proceeds

Home

$350,000

$500,000

$100,000

$280,000

Auto

60,000

40,000

10,000

20,000

Because of the extensive damage caused by the tornado, the President designated the area a Federal disaster area. Olaf and his wife, Anna, always file a joint return. Their 2018 tax return shows AGI of $180,000 and taxable income of $140,000. In 2019, their return shows AGI of $300,000 and taxable income (exclusive of the casualty loss deduction) of $220,000. Determine the amount of Olaf and Anna's loss and the year in which they should take the loss.

Reference no: EM132667504

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