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The taxpayer had and insurance policy that covered up to $431,900 for personal belongings. They opted not to itemize and take the 80%, which is $345,520. Now they want to claim a loss for the difference ($86,380) in their 2018 return. Per client, their cost basis is estimated to be $450,000.
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I don't have a citation, but IRS does not play second fiddle. If the taxpayer elects to take a reduced settlement with the insurance, IRS considers that a full reimbursement. I will put a shout out for someone that might be able to back me up with a citation.
Answers are easy. Questions are hard!
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I don't have a citation, but IRS does not play second fiddle. If the taxpayer elects to take a reduced settlement with the insurance, IRS considers that a full reimbursement. I will put a shout out for someone that might be able to back me up with a citation.
Answers are easy. Questions are hard!
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Answers are easy. Questions are hard!
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https://www.irs.gov/publications/p547#en_US_2018_publink1000225265
As a side note, what does "opted not to itemize and take the 80%" mean? To me, that means that $431,900 is not a proven amount, and if it was a proven amount, WHY ON EARTH would the taxpayer choose to not take $86,380 just to save some paperwork? That seems REALLY fishy to me, and likely means the REAL amount is closer to the $350,000 mark.
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Still an AllStar