Asked by Ghefhine Casilao on Jun 04, 2024
Verified
What are the general limits or floors placed on deductible personal casualty losses?
Casualty Losses
Financial losses resulting from sudden, unexpected events like natural disasters, accidents, or thefts, potentially deductible under tax laws.
Deductible
is an amount that can be subtracted from an individual's gross income for tax purposes, reducing the taxable income.
Personal
Relating to private individuals, their characteristics, or their circumstances without pertaining to their professional or public lives.
- Identify which personal casualty losses are deductible and the impact of federally declared disaster areas on these deductions.
Verified Answer
PG
pedro gonzalezJun 08, 2024
Final Answer :
First,each separate casualty is reduced by $100.It is important to note that this is $100 per casualty and not $100 per item of property.The second and more substantial limitation is the 10% of AGI limitation.In order to obtain any benefit from a casualty loss,the loss must be in excess of 10% of AGI.Because of the 10% limitation,most taxpayers generally do not benefit from casualty losses unless the loss was substantial.
Learning Objectives
- Identify which personal casualty losses are deductible and the impact of federally declared disaster areas on these deductions.