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months. What expenses, if any, can Hank deduct on his return? Which
deductions are for AGI, and which ones are from AGI?
Tax Deductions on Stolen Items:
During 2012, someone broke into Jacob's personal residence and took
the following items:
Asset
Adjusted Basis
Fair Market Value (FMV) before
Fair Market Value (FMV) after
Insurance Recovery
Business computer
$12,000
$10,000
$ –0–
$ 7,000
Bearer bonds
30,000
25,000
–0–
–0–
Silverware
7,000
20,000
–0–
18,000
Cash
8,000
8,000
–0–
–0–
Jacob is an employee and used the computer 100% of the time in his
employment. Although his homeowner's insurance policy paid Jacob
$7,000 for the stolen computer, Jacob's employer did not reimburse
Jacob for any of the remainder of his loss. Jacob's AGI for the year,
before considering any of the above items, is $50,000. Determine the
total deduction for the stolen items on Jacob's 2012 tax return.
Cost Recovery: