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taxmap/pub17/p17-135.htm#TXMP0b38d867 Chapter 25 Nonbusiness Casualty and Theft Losses(p162)

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Introduction

This chapter explains the tax treatment of personal (not business related) casualty losses, theft losses, and losses on deposits.

The chapter also explains the following topics.

• How to figure the amount of your loss.
• How to treat insurance and other reimbursements you receive.
• The deduction limits.
• When and how to report a casualty or theft.

taxmap/pub17/p17-135.htm#TXMP03f3c465 Forms to file.(p162)

When you have a casualty or theft, you have to file Form 4684. You will also have to file one or both of the following forms.

• Schedule A (Form 1040), Itemized Deductions
• Schedule D (Form 1040), Capital Gains and Losses

taxmap/pub17/p17-135.htm#TXMP621e94e6 Condemnations.(p162)

For information on condemnations of property, see Involuntary Conversions in chapter 1 of Publication 544.

taxmap/pub17/p17-135.htm#TXMP50b5c689 Workbook for casualties and thefts.(p162)

Publication 584 is available to help you make a list of your stolen or damaged personal-use property and figure your loss. It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles.

taxmap/pub17/p17-135.htm#TXMP7ba326ba Other sources of information.(p162)

For information on a casualty or theft loss of business or income-producing property, see Publication 547.

Useful items

You may want to see:

taxmap/pub17/p17-135.htm#TXMP520ef730 Casualty(p163)

A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual.

• A sudden event is one that is swift, not gradual or progressive.
• An unexpected event is one that is ordinarily unanticipated and unintended.
• An unusual event is one that is not a day-to-day occurrence and that is not typical of the activity in which you were engaged.

taxmap/pub17/p17-135.htm#TXMP7eeec689 Deductible losses.(p163)

Deductible casualty losses can result from a number of different causes, including the following.

• Car accidents (but see Nondeductible losses, next, for exceptions).
• Earthquakes.
• Fires (but see Nondeductible losses, next, for exceptions).
• Floods.
• Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster as discussed under Disaster Area Losses in Publication 547.
• Mine cave-ins.
• Shipwrecks.
• Sonic booms.
• Storms, including hurricanes and tornadoes.
• Terrorist attacks.
• Vandalism.
• Volcanic eruptions.

taxmap/pub17/p17-135.htm#TXMP766722af Nondeductible losses.(p163)

A casualty loss is not deductible if the damage or destruction is caused by the following.

• Accidentally breaking articles such as glassware or china under normal conditions.
• A family pet (explained below).
• A fire if you willfully set it or pay someone else to set it.
• A car accident if your willful negligence or willful act caused it. The same is true if the willful act or willful negligence of someone acting for you caused the accident.
• Progressive deterioration (explained later).

taxmap/pub17/p17-135.htm#TXMP02e01bf7 Family pet.(p163)

Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed earlier under Casualty are met.

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Example.(p163)

Your antique oriental rug was damaged by your new puppy before it was housebroken. Because the damage was not unexpected and unusual, the loss is not deductible as a casualty loss.

taxmap/pub17/p17-135.htm#TXMP4d0454fd Progressive deterioration.(p163)

Loss of property due to progressive deterioration is not deductible as a casualty loss. This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. The following are examples of damage due to progressive deterioration.

• The steady weakening of a building due to normal wind and weather conditions.
• The deterioration and damage to a water heater that bursts. However, the rust and water damage to rugs and drapes caused by the bursting of a water heater does qualify as a casualty.
• Most losses of property caused by droughts. To be deductible, a drought-related loss generally must be incurred in a trade or business or in a transaction entered into for profit.
• Termite or moth damage.
• The damage or destruction of trees, shrubs, or other plants by a fungus, disease, insects, worms, or similar pests. However, a sudden destruction due to an unexpected or unusual infestation of beetles or other insects may result in a casualty loss.

Previous Page:  Publication 17 - Your Federal Income Tax - How To Report Next Page:  Publication 17 - Your Federal Income Tax - Theft Use   to find additional occurrences of topic items.