This Summer,Rick's Home (Which Has a Basis of $80,000)is Damaged

question 22

Multiple Choice

This summer,Rick's home (which has a basis of $80,000) is damaged by a tornado.An appraisal by a realtor placed the FMV of the home at $120,000 before the tornado and at $85,000 after the tornado.Rick estimates that the insurance company will reimburse him for 60% of the loss.Next year,the insurance company pays Rick $20,000.Rick's current year's AGI is $50,000 and his next year's AGI is $55,000.Rick suffers no other casualty losses in either year.After limitations,Rick may deduct a casualty loss this year of

• A)$ 8,900.
• B)$ 9,900.
• C)$15,000.
• D)$35,000.

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Definitions:

Inflation Rate

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Spreadsheet

A digital document that allows users to organize, analyze, and store data in a table with rows and columns.

Linear Function

A mathematical function that produces a graph of a straight line and is defined by an equation of the first degree.

Polynomial Function

A mathematical expression consisting of variables, coefficients, and non-negative integer exponents, summed together.