What is the proper tax treatment


Mary's diamond ring was stolen in 2011. She originally paid $8,000 for the ring, but it was worth considerably more at the time of the theft. Mary filed an insurance claim for the stolen ring, but the claim was denied. Because the insurance claim was denied, Mary took a casualty loss for the stolen ring on her 2011 tax return. In 2011, Mary had AGI of $40,000. In 2012, the insurance company had a "change of heart" and sent Mary a check for $5,000 for the stolen ring. The per event floor is $100.

What is the proper tax treatment of the $5,000 Mary received from the insurance company in 2012?

Request for Solution File

Ask an Expert for Answer!!
Accounting Basics: What is the proper tax treatment
Reference No:- TGS043363

Expected delivery within 24 Hours