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Otto Operates a Bakery and Is on the Cash Method

question 48

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Otto operates a bakery and is on the cash method and calendar year. This year, one of Otto's ovens caught fire and was partially destroyed. Otto bought it a few years ago for $23,000 and claimed depreciation of $12,600 up to the fire. Otto was charged $4,100 for repairs to the oven but the insurance company paid Otto $1,650 for the damage. What is Otto's casualty loss deduction?


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