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7 January, 05:58

Don operates a taxi business, and this year one of his taxis was damaged in a traffic accident. the taxi was originally purchased for $32,000 and the adjusted basis was $2,000 at the time of the accident. the taxi was repaired at a cost of $2,500 and insurance reimbursed don $700 of this cost. what is the amount of don's casualty loss deduction?

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  1. 7 January, 06:04
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    A casualty loss is a kind of tax loss that is an unexpected, unforeseen, or unusual event. This is computed by:Lesser of adjusted basis or decline in value (repair cost) less insurance reimbursement (Lesser of $2,500 or $2,000 is $2,000 - $700 = $1,300)
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