Ford's Automobile That He Uses 100% for Business Is Vandalized

question 62

Multiple Choice

Ford's automobile that he uses 100% for business is vandalized. The adjusted basis before the vandalism is $3,000. The fair market value of the car before the vandalism is $7,000, and the fair market value of the property after the vandalism is $2,000. Ford's insurance does not cover vandalism. What is Ford's loss deduction for the year?

• A)$- 0 -
• B)$1,000
• C)$2,000
• D)$3,000
• E)$5,000

---

Definitions:

Dishonored

Used to describe a check or promissory note that has been presented for payment but is refused by the bank due to insufficient funds or other reasons.

Settlement

The process of concluding a transaction or an agreement by completing all procedural and payment aspects.

Account Receivable

Accounts Receivable represents the money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Allowance Method

An accounting technique used to account for bad debts by estimating and setting aside a portion of accounts receivable deemed unlikely to be collected.