A truck owned by Duster Demolition Services is involved in an accident. The truck originally cost…

A truck owned by Duster Demolition Services is involved in
an accident. The truck originally cost $40,000, and $25,000 of depreciation had
been taken on the truck as of the date of the accident. The cost of repairing
the truck is $10,000, for which the insurance company reimburses Duster $8,000.

a. How much of a loss, if any, is Duster entitled to deduct
as a result of the accident?

b. What is the adjusted basis of the truck after the
accident?