Derrick owns a farm in eastern North Carolina. A hurricane hit the area (a national disaster area was declared) and destroyed a farm building and some farm equipment and damaged a barn. Item Adjusted Basis FMV before Damage FMV after Insurance
Damage Proceeds
Building $ 109,500 $ 143,100 $ 0 $ 75,900
Equipment 86,100 58,700 0 24,800
Barn 126,900 186,300 126,900 44,700
Due to the extensive damage throughout the area, the President of the United States declared all areas affected by the hurricane as a disaster area. Derrick, who files a joint return with his wife, had $65,100 of taxable income last year. Their taxable income for the current year is $210,300, excluding the loss from the hurricane.
a-1. Calculate the amount of the loss deductible by Derrick and his wife?
a-2. What amount of loss should be adjusted against current and last year?