Virginia has a casualty gain of $5,000 and a casualty loss of $2,500, before red

Question

Virginia has a casualty gain of $5,000 and a casualty loss of $2,500, before reduction by the $100 floor. The gain and loss were the result of two separate casualties, and both properties were personal-use assets. What is Virginia's gain or loss as a result of these casualties? a. $5,000 capital gain and $2,500 capital loss. b. $5,000 capital gain and $2,400 itemized deduction, subject to the 10 percent of adjusted gross income limitation. c. $5,000 capital gain and $2,500 itemized deduction, subject to the 10 percent of adjusted gross income limitation. d. $5,000 capital gain and $2,400 capital loss. e. None of these choices are correct.

Explanation / Answer

b. $5,000 capital gain and $2,400 itemized deduction, subject to the 10 percent of adjusted gross income limitation

Note :

Capital Gain = 5000

Deduction for Loss of Personal Property = Loss Amount – $100 Subject to the extent of 10% of Adjusted Gross Income

Deduction for Loss of Personal Property = 2500-100 Subject to the extent of 10% of Adjusted Gross Income

Deduction for Loss of Personal Property = 2400 Subject to the extent of 10% of Adjusted Gross Income

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