A casualty loss is measured as the difference between the fair value of an affected asset before the loss and the fair value after the loss, indicating a total casualty loss of $150,000 - $125,000 or $25,000. This is reduced by insurance proceeds of $10,000, resulting in a net casualty loss of $15,000. Each casualty loss is reduced by $100 to determine the deductible amount, which would be $14,900. The itemized deduction will be the total of all casualty losses reduced by 10% of AGI, or $4,000, giving an itemized deduction for casualty losses of $10,900.
