Reference no: EM132680765

Problem 1: Carla's car was destroyed by fire while she was in the hospital with Covid. The car cost her $3000 and was worth $2000 when it was destroyed. She had no insurance. Her employer and employee decided to help her buy a new car that cost her $3500. Her employer contributed $2500 and her fellow employees raised $1500. She recovered from Covid and donated $500 of the $4000 to the American Red Cross. Which of the following is true?

Select one or more:

a. Carla's employer receives a deduction of $2500.
b. Carla has recognized income of $2000 ($2500 less $500)
c. Carla's receives a casualty loss deduction of $3000,
d. Carla has recognized income of $2500 and an itemized deduction of $500
e. Carla receives a casualty loss deduction of $2000.
f. Carla has recognized income of $3500 ($4000 less $500)