Problem

Tax Question

Mary, who is single, had the following items for 2016:

Salary $80,000
Loss on sale of 1244 small business stock acquired 3 years ago (60,000)
Stock acquired 2 years ago became worthless during the year (15,000)
Long-term capital gain 25,000
Nonbusiness bad debt (9,000)

Mary had a car accident during the year in which his car was completely destroyed. At the time of the accident, the car had a fair market value of $30,000 and an adjusted basis of $40,000. She used the car 100% of the time for personal use. She received an insurance recovery of $21,000.

Provide a detailed calculation of Mary's AGI. Your answer should also include any applicable rules, exceptions to rules, limitations, tax treatment of certain items, etc.

What is the rule for calculating the amount of the casualty loss. Apply the rule to the facts and show a detailed calculation of the loss.