In the current year, Wilson Enterprises, a calendar year taxpayer, suffers a casualty loss of $135,000. The casualty was attributable to a Federally declared disaster. How much of the casualty loss will be deductible by Wilson under the following circumstances

Wilson Enterprises is entitled to claim his casualty loss since it was a federally declared disaster and has not been compensated by any insurance company as the question proclaimed. Wilson Enterprises is therefore entitled to a casualty loss of $76,725.00

Explanation:

Casualty and theft losses are limited to a $100 threshold per loss event (this works like a deductible) and an overall amount that must exceed 10 percent of your Adjusted Gross Income (AGI) in order to take the deduction. Losses do not include any property that is covered by insurance if the insurance company reimburses you for the loss.

SOLUTION

Wilson Enterprises is therefore entitled to a casualty loss of $135,00.00

Therefore, using the provision of the law, $100.00 was to be the statutory claim

= $135,000.00 - $100.00) = $134,900.00

∴ AIG = $518,750.00

Therefore, 10% 0f AIG Threshold = ($518,750.00 x .10) =$58,175.00

To find the deductible Loss

$134,900.00 - $58,175.00 = $76,725.00

Therefore, the deductible loss is  $76,725.00

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