Sarah had the following losses in the current year:

- Termite damage to her home. The fair market value of the home before the damage was
$250,000. The air market value after the damage was $225,000. Sarah;s basis in the property is
$200,000.
- her car was broken into and they stole her camera. The camera had a basis of $1,500 and a
fair market value of $1,000. She received $200 in insurance proceeds.
- There was a fire on Sarah's boat. The fire caused a $10,000 decline in value. Sarah's basis in
the property was $6,000. Sarah received $1,000 in insurance proceeds.

Sarah's AGI is $30,000. What is her available casualty loss for the current year?

A. $2,600
B. $2,700
C. $27,600
D. $31,300
Answer: A

The termite damage is not a casualty loss.

The loss on the other two items is the lesser of the declined in value or the basis less any
insurance proceeds and less a $100 floor per incident. Then the total loss must be reduced by
10% of Sarah's AGI.

Car = $1,000 decline in value - $200 in insurance proceeds -

$100 floor = $700
Boat = $6,000 basis - $1m000 - $100 = $4,900

$700 + $4,900 - (10% X $30,000) = $2,600

Alyssa, a self-employed CFP Practitioner, wanted to go to Hawaii for vacation. Being very
creative, she decided to schedule several business meetings while she was there in order to
deduct the expense as a business trip. She left her home on Friday, scheduled three business
meetings for the following Wednesday and returned home the following Monday. Which of the
following is true?

A. She cannot deduct anything as a business expense.

B. She can deduct one night of hotel and one day of meals as a business expense.
C. She can deduct all of the travel, one night of hotel and one day of meals as a business
expense.
D. She can deduct all of the travel, hotel and meals as a business expense.

Answer: B

this is a domestic trip. Therefore, the travel is only deductible if the trip is primarily for business. Clearly
this trip is for pleasure.; therefore, the travel is not deductible. The one night of hotel and the one day of
meals will be deductible since she did work for one day.