This summer, Rick's home (which has a basis of $80,000) is damaged by a tornado which was declared a federal disaster. An appraisal by a realtor placed the FMV of the home at $120,000 before the tornado and at $85,000 after the tornado. Rick estimates that the insurance company will reimburse him for 60% of the loss. Next year, the insurance company pays Rick $20,000. Rick's current year's AGI is $50,000 and his next year's AGI is $55,000. Rick suffers no other casualty losses in either year. After limitations, Rick may deduct a casualty loss this year of

A. $9,900.
B. $35,000.
C. $8,900.
D. $15,000.


Answer: C

Business

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