The theft which occurred on April 15th, 2008 is treated as one incident. In determining her gain or loss, you must use the original basis of the items. In this case her basis was $12,000 for the fur coat and $800 for the TV, so Jackie had a total basis of $12,800 in the items which were stolen.
You must deduct the insurance proceeds of $10,000 from her $12,800 basis, which leaves her with a loss of $2,800. She must first deduct $100 for each incident that occured, which reduces her allowed loss to $2,700. She must then again reduce her loss by 10% of her AGI which would be $2,500, and she is now left with a reportable loss of $200. This allowed loss of $200 is taken as an itemized deduction
on Schedule A.
For the summer cottage which was destroyed on July 20, 2008, Jackie actually had a gain. Her insurance proceeds of $65,000 exceed her basis of $50,000, so she has a gain of $15,000. This is treated as a long term capital gain and is reported on Schedule D of her tax
return, and is subject to the long term capital gains tax rates
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