The Ottomans Own a Winter Cabin in Durango, Colorado

question 14

Multiple Choice

The Ottomans own a winter cabin in Durango, Colorado. They purchased the cabin in 2004 for $65,000. During 2018, a blizzard, a federally-declared disaster, partially destroys the cabin. The fair market value of the cabin after the blizzard is $70,000. The insurance company estimates that the cost of repairing the cabin will be $40,000. The insurance company will reimburse the Ottomans for 70% of the repair cost. What can they deduct as a casualty loss if their adjusted gross income for the year is $80,000?

• A)$3,900
• B)$4,000
• C)$8,000
• D)$11,900
• E)$12,000

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