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This year Amy purchased $3,700 of equipment for use in her business. However, the machine was damaged in a traffic accident while Amy was transporting the equipment to her business. Note that because Amy did not place the equipment into service during the year, she does not claim any depreciation expense for the equipment.
a. After the accident, Amy had the choice of repairing the equipment for $2,740 or selling the equipment to a junk shop for $400. Amy sold the equipment. What amount can Amy deduct for the loss of the equipment?
b. After the accident, Amy repaired the equipment for $1,370. What amount can Amy deduct for the loss of the equipment?
c. After the accident, Amy could not replace the equipment so she had the equipment repaired for $4,300. What amount can Amy deduct for the loss of the equipment?
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