Abel's car ws completely destroyed in an accident that was his fault. His loss was $8,500 and his insurance company reimbursed him $6,500. What amount of casualty loss can Abel claim on his return (before deduction limitations)?
a. $0
b. $2,000
c. $6,500
d. $8,500
is the correct answer b
Yes.
2,000
No, the correct answer is c. $6,500.
To determine the correct answer, we need to calculate the amount of casualty loss that Abel can claim on his tax return.
Casualty loss is the decrease in the value of property due to a sudden, unexpected event, such as an accident. In this case, Abel's car was completely destroyed in an accident that was his fault.
The amount of casualty loss that Abel can claim on his tax return is calculated as follows:
Casualty Loss = Loss - Insurance Reimbursement
Loss refers to the total amount of loss incurred, which in this case is $8,500. Insurance Reimbursement refers to the amount reimbursed by Abel's insurance company, which is $6,500.
Therefore, the casualty loss that Abel can claim on his tax return is:
Casualty Loss = $8,500 - $6,500
Casualty Loss = $2,000
Hence, the correct answer is b) $2,000.