1) You may not deduct casualty and theft losses covered by insurance, unless you file a timely claim for reimbursement and you reduce the loss by the amount of any reimbursement or expected reimbursement.
2) According to the IRS “A casualty loss can result from the damage, destruction, or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake, or volcanic eruption. A casualty doesn’t include normal wear and tear or progressive deterioration.”
3) According to the IRS “A theft is the taking and removal of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and must have been done with criminal intent.”
<p “=””>4) Personal losses are itemized deductions that are summarized on Form 4684 (Casualties and Thefts) and are reduced by 10% of your adjusted gross income.<p “=””>5) Business losses are not subject to the 10% limitation and are summarized on Form 4684 (Casualties and Thefts) page 2.<p “=””>6) Gains from casualty and theft are reported as income<p “=””>7) Generally casualty losses are deductible in the tax year the casualty occurs.
<p “=””>8) Special treatment for losses in a disaster area. If you suffer a casualty loss due to a federally declared disaster then you can treat the loss as having occurred in the year immediately preceding the tax year in which it happened. For example if losses are suffered from flooding in Houston in August of 2017 an amended return can be filed immediately for tax year 2016 rather than having to wait until 2018 when the 2017 return is filed.<p “=””>9) If your losses exceed your income you may have a net operating loss (NOL). You don’t have to be in business to have an NOL from a casualty.<p “=””>10) Properly calculating the amount of loss can be complex. It is probably wise to consult with your accountant.