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Given your facts, you have a basis to deduct this loss as a casualty loss
on your tax return
. Pursuant to IRS
Tax Topic 515 (http://www.irs.gov/taxtopics/tc515.html):
"Generally, you may deduct casualty and theft losses relating to your home, household items and vehicles on your federal income
tax return. 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.
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 does not include normal wear and tear or progressive deterioration.
If your property is personal
-use property or is not completely destroyed, the amount of your casualty loss is the lesser of:
The adjusted basis of your property, or
The decrease in fair market value of your property as a result of the casualty
The amount of your theft loss is generally the adjusted basis of your property because the fair market value of your property immediately after the theft is considered to be zero.
You must reduce the loss, whether it is a casualty or theft loss, by any salvage value and by any insurance or other reimbursement you receive or expect to receive. The adjusted basis of your property is usually your cost, increased or decreased by certain events such as improvements or depreciation
. You may determine the decrease in fair market value by appraisal, or if certain conditions are met, by the cost of repairing the property.Individuals
are required to claim their casualty and theft losses as an itemized deduction
on Form 1040
, Schedule A
(PDF), Itemized Deductions, (or Schedule A in Form
1040NR (PDF), if you are a nonresident alien
). For property held by you for personal use, you must subtract $100 from each casualty or theft event that occurred during the year after you have subtracted any salvage value and any insurance or other reimbursement. Then add up all those amounts and subtract 10% of your adjusted gross income
from that total to calculate your allowable casualty and theft losses for the year.
Report casualty and theft losses on Form 4684
(PDF), Casualties and Thefts. Use Section A for personal-use property and Section B for business or income-producing property. If personal-use property was damaged, destroyed or stolen, you may wish to refer to Publication 584, Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property). For losses involving business-use property, refer to Publication 584-B (PDF), Business Casualty, Disaster, and Theft Loss Workbook.
Casualty losses are generally deductible
in the year the casualty occurred. However, if you have a casualty loss from a federally declared disaster that occurred in an area warranting public or individual assistance (or both), you can choose to treat the loss as having occurred in the year immediately preceding the tax year in which the disaster happened, and you can deduct the loss on your return or amended return
for that preceding tax year. Review Disaster Assistance and Emergency Relief for Individuals and Businesses on IRS.gov, for information regarding timeframes and additional information to your specific qualifying event."
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