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I am trying to figure out how I determine if I have a

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I am trying to figure out how I determine if I have a carryover from my casualty loss claimed last year for the flood I claimed 27K in loss but with the 10% AGI it only allowed 7K Does this mean I can claim the delta?

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Answered in 43 minutes by:
3/19/2018
taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,141
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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The Internal Revenue code only allows casualty losses to the extent that they exceed 10% of your adjusted gross income plus $100. There is no carry-over for any unused amount.The amount that is equal to 10% of your adjusted gross income is simply a disallowed deduction. You get no benefit for it at all.I hope this has answered your question. If you have any more, please feel free to ask and I will be happy to answer.Thanks! Have a great week!Roger
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Customer reply replied 4 months ago
a federal disaster is still susceptible to the 10% ?
All disasters and casualties face the same 10% haircut.
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The benefit of a federal declared disaster is that you can use the loss to offset a prior-year to get money back quicker through the amended return process. Also, Federal disasters can take advantage of a couple of Revenue proclamations that ease the determination of fair market value.
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Did you have any more questions?

In case you wanted a citation, Internal Revenue Code §167 is the section that allows you to claim a casualty loss. It says:

(a) General rule

There shall be allowed as a deduction any loss sustained during the taxable year and not compensated for by insurance or otherwise.

(2) Net casualty loss allowed only to the extent it exceeds 10 percent of adjusted gross income

(A) In general, if the personal casualty losses for any taxable year exceed the personal casualty gains for such taxable year, such losses shall be allowed for the taxable year only to the extent of the sum of—

(i)the amount of the personal casualty gains for the taxable year, plus

(ii)so much of such excess as exceeds 10 percent of the adjusted gross income of the individual.

So the IRS only allows casualty losses for the amount that exceeds 10% of AGI. The amount that equals 10% of the AGI is not considered a loss for deduction purposes. Only the EXCESS is allowed to be deducted.

The only thing that a Federal declared disaster has different is that a taxpayer is allowed to amend the prior year return to take the loss in the year prior to the casualty. In theory, you would get your refund faster than if you wait until you file your current year tax return.

Let me know if you have any more questions.

Thanks!

Roger

taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,141
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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