PERSONAL CASUALTY LOSS: EXAMPLE 1 (2 OF 2)
01.Core Concepts
• Dwight’s casualty loss is valued at $200,000 which is his adjusted basis less insurance proceeds received (insurance proceeds in this case are zero). • His economic loss (the fair market value before the event, $400,000 less the fair market value after the event, $90,000) is $310,000. • Since Dwight had never paid tax on the $200,000 gain in the property, however, he cannot take a tax deduction for the economic loss. • If Dwight had the property fully insured, he would have received the full $310,000 (less his deductible) from the insurance company.