My SIM #7 in REG has a different answer so I'm assuming that the numbers are different, although it is still a casualty loss SIM. So I can't provide specific number details, but I can tell you how I had solved my SIM #7.
The first thing to do is calculate the individual casualty loss for each item you're given. The formula to do so is:
FMV of the item before the damage – FMV of the item after the damage (if applicable) – any insurance recovery (if applicable)
This formula should be used even if it creates a gain rather than a loss. For example, my SIM has a stereo loss under auto casualty of ($500) due to a $1,000 FMV before the damage and a $1,500 insurance recovery.
Once you have all of the individual item losses calculated, you then take the sum of those less the adjustments to get your total deductible casualty loss. The adjustment formula to know is:
10% of AGI + $100 floor for each incident
For my SIM, the taxpayer had an AGI of $70,000 and both a home casualty incident and an auto casualty incident. Thus, my total adjustment was $7,200 ([$70,000 x 10%] + (2 incidents x $100 floor]).
I hope this helps!
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