Derrick owns a farm in eastern North Carolina. A hurricane hit the area (a national disaster area was declared) and destroyed a fam building and some farm equipment and damaged a barn.

FMV

Item Adjusted Basis before FMV after damage Insurance Proceeds

Bulding $120, 300 $179, 400 0 $61,200

Equipment 80,200 59,3000 0 19,900

Barn 117,900 191,100 117,900 52, 800

Due to the extensive damage throughout the area, the president of the United States declared all areas affected by the huricane a disaster area. Derrick, who files a joint return with his wife, had $63,000 of taxable income last year. Their taxable income for the current year is $204,000, excluding the loss from the hurricane.

Required:

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?