During the current year, Rulon ‘s toiler overflowed due to a
pipe breaking during a nationally declared earthquake disaster. Rulon was at
work when the earthquake hie, and by the time he returned, the water had
flooded the basement, causing damage to the carpet, walls, and ceiling. The
cost of repairing the damage was $9,000. Rulon has homeowners insurance that
will cover half of the damage. However, because he has already had claims this
year, Rulon does not want to report the incident co his insurance company for
fear of a large increase in insurance rates. Instead, Rulon wants to deduce the
loss as a casua lty loss on his tax return . His AGI for this year is $50,000,
and he has other itemized deductions of $6,000. Rulon is single. What amount of
the casualty loss may he deduce?
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