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The most frequently asked tax questions related to Personal Taxes
For Tax Payers
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a. The exemption amounts that were scheduled to be $86,200 for joint filers (one-half of that amount for separate filers) and $55,400 for unmarried taxpayers, for 2018, have been increased to $109,400 for joint filers ($54,700 for separate filers) and $70,300 for all others.
b. The AMTI threshold, above which the exemption is phased out $1 for every $4 of excess, has been increased to $1,000,000 for married taxpayers filing jointly and $500,000 for all others. These amounts were scheduled to be $164,100 for joint filers, $82,050 for separate filers and $123,100 for all other taxpayers.
1.Determine your cost or other basis in the property before the casualty or theft.
2.Determine the decrease in fair market value (FMV) of the property as a result of the casualty or theft. (The decrease in FMV is the difference between the property's value immediately before and immediately after the casualty or theft.)
3.From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you received or expect to receive
1.You must reduce each casualty or theft loss by $100 ($100 rule).
2.You must further reduce the total of all your losses by 10% of your adjusted gross income (10% rule).
For details, see Disaster Area Losses in Publication 547.
Generally, if a single casualty or theft involves more than one item of property, you must figure the loss on each item separately. Then combine the losses to determine the total loss from that casualty or theft.
•Storm (including hurricanes and tornadoes). •Flood and wind, •Fire, •Earthquake,
•Other “sudden and unexpected events,” such as an automobile accident, also qualify as a casualty for tax purposes.
•Be able to show that there actually was a casualty loss including showing all of the following:
The type of casualty, Its date of occurrence, That the loss was a direct result of the casualty , That the taxpayer owned the property or was liable for the damage to the owner of the property, and whether there is a claim for insurance reimbursement with a reasonable expectation of recovery. and Justify the amount taken as a deduction.
If the property is used in a trade or business or other activity conducted for profit, the allowable deduction is the lesser of the property’s adjusted basis (before the casualty) or its decline in value because of the casualty.
If business property is completely destroyed, the deduction is the full amount of the property’s adjusted basis, reduced by any insurance recovery, even if the basis exceeded the property’s value before the casualty.
If you have disaster-related losses to business assets, you don’t have to worry about the $100 subtraction rule or the 10% of AGI subtraction rule. Instead, you can deduct the full amount of your uninsured loss as a business expense