During the current year, Horace's personal residence is damaged by a tornado. The residence had an adjusted basis of $80,000 before the tornado. The cost of re-pairing the damage is $30,000. Horace's insurance company reimburses him $22,000 for the repairs. Horace itemizes his deductions and has an adjusted gross income of $57,000 for the year. What is his adjusted basis in the residence after the tor?

Question

Business

Terry Wright

26 January, 08:12

During the current year, Horace's personal residence is damaged by a tornado. The residence had an adjusted basis of $80,000 before the tornado. The cost of re-pairing the damage is $30,000. Horace's insurance company reimburses him $22,000 for the repairs. Horace itemizes his deductions and has an adjusted gross income of $57,000 for the year. What is his adjusted basis in the residence after the tor?

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Answers (1)

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Drake Short · Answer 1

His adjusted basis in the residence after the tornado is $85,800.

Explanation:

adjusted basis after tornado = adjusted basis before tornado + cost of repairing - insurance reimbursement - deductible casualty loss

= $80,000 + $30,000 - $22,000 - $2,200

= $85,800

Therefore, His adjusted basis in the residence after the tornado is $85,800.