Norm's Car, Which He Uses 100% for Personal Purposes, Was

question 123

Multiple Choice

Norm's car, which he uses 100% for personal purposes, was completely destroyed in an accident in 2017. The car's adjusted basis at the time of the accident was $13,000. Its fair market value was $10,000. The car was covered by a $2,000 deductible insurance policy. Norm did not file a claim against the insurance policy because of a fear that reporting the accident would result in a substantial increase in his insurance rates. His adjusted gross income was $14,000 (before considering the loss) . What is Norm's deductible loss?

• A)$0
• B)$100
• C)$500
• D)$9,500
• E)None of the above

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Definitions:

Reality

The state of things as they actually exist, as opposed to an idealistic or notional idea of them.

Social-Cognitive

A theoretical perspective that emphasizes the role of cognitive processes in understanding social behavior, including how we interpret, analyze, and remember information about the social world.

Vulnerable

A state of being open to harm, attack, or emotional hurt, often due to a lack of protection or defense.

Overthink

The act of thinking about something too much or for too long, often leading to excessive worry or analysis.