[Anonymous]

Hello gang,

Lets say for instance hypothetically I get a casualty loss simulation on the exam. If the directions say to ignore any AGI limitations, do I deduct the $100 per casualty event to figure out the loss?

Example: Home is destroyed by a fire. Adjusted basis in the property is $150K and FMV before the file is $200K. Insurance reimbursements amount to be $100K. Is the casualty loss $50K or $49,900?

Thanks in advance!

[SIMmer Down]

It depends on what the SIM is asking for. The Casualty Loss is $50,000. Your deduction that goes on Schedule A Line 20 is going to equal $49,900 – 10% of AGI. So, without regard to AGI, the deduction would be $49,900.

A really good way to practice topics for Reg is to Google the form and fill it out so you have structure to the calculation.

https://www.irs.gov/pub/irs-pdf/f4684.pdf

Another way to get a good explanation for topics is to Google “Topic + IRS Pub”

https://www.irs.gov/pub/irs-pdf/p547.pdf

[EuroAddict]

Becker's study material says to just pick the lowest answer. To me that says to not invest much (if any) of my time in studying that part.

-----------------------------
BEC - 77, 03/2015 (first try)
FAR - 79, 05/2015 (second try)
REG - 83, 12/2015 (first try)
AUD - 84, 03/2015 (first try)

I got 99 problems but the CPA ain't one.

[Anonymous]

Let's say, hypothetically, I had the same Sim. I would, hypothetically, advise other exam candidates to disregard only the % of AGI limitation and not the $100 per casualty.

[Anonymous]

Yes, I would deduct the $100. Make sure you are deducting $100 PER INCIDENT. That part is important.

Example: A thief breaks in and steals $1,000 in jewelry, $2,000 in electronics, and $500 in other miscellaneous items. A few months later, a natural disaster causes $8,000 in loss to your home. Your total casualty loss without regard to AGI is 1,000 + 2,000 + 500 – 100 +8,000 – 100 = $11,300. There are two incidents so two $100 deductions.

I feel like they would definitely want the $100 deducted because they're testing you on whether you know the $100 rule. I've had Gleim questions where they ask you that same question, and the correct answer deducts the $100 per incident.

[jeff]

Adjusted Basis or Loss of value (pick lower number)

– insurance proceeds

– $100

– 10% AGI

AUD - 79
BEC - 80
FAR - 76
REG - 92

Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[Author]

Replies