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Can 1040x Be Filed Electronically

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Can 1040x Be Filed Electronically

Can 1040x be filed electronically 3. Can 1040x be filed electronically   Gifts Table of Contents If you give gifts in the course of your trade or business, you can deduct all or part of the cost. Can 1040x be filed electronically This chapter explains the limits and rules for deducting the costs of gifts. Can 1040x be filed electronically $25 limit. Can 1040x be filed electronically   You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. Can 1040x be filed electronically A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift. Can 1040x be filed electronically   If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. Can 1040x be filed electronically This rule does not apply if you have a bona fide, independent business connection with that family member and the gift is not intended for the customer's eventual use. Can 1040x be filed electronically   If you and your spouse both give gifts, both of you are treated as one taxpayer. Can 1040x be filed electronically It does not matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. Can 1040x be filed electronically If a partnership gives gifts, the partnership and the partners are treated as one taxpayer. Can 1040x be filed electronically Example. Can 1040x be filed electronically Bob Jones sells products to Local Company. Can 1040x be filed electronically He and his wife, Jan, gave Local Company three gourmet gift baskets to thank them for their business. Can 1040x be filed electronically They paid $80 for each gift basket, or $240 total. Can 1040x be filed electronically Three of Local Company's executives took the gift baskets home for their families' use. Can 1040x be filed electronically Bob and Jan have no independent business relationship with any of the executives' other family members. Can 1040x be filed electronically They can deduct a total of $75 ($25 limit × 3) for the gift baskets. Can 1040x be filed electronically Incidental costs. Can 1040x be filed electronically   Incidental costs, such as engraving on jewelry, or packaging, insuring, and mailing, are generally not included in determining the cost of a gift for purposes of the $25 limit. Can 1040x be filed electronically   A cost is incidental only if it does not add substantial value to the gift. Can 1040x be filed electronically For example, the cost of gift wrapping is an incidental cost. Can 1040x be filed electronically However, the purchase of an ornamental basket for packaging fruit is not an incidental cost if the value of the basket is substantial compared to the value of the fruit. Can 1040x be filed electronically Exceptions. Can 1040x be filed electronically   The following items are not considered gifts for purposes of the $25 limit. Can 1040x be filed electronically An item that costs $4 or less and: Has your name clearly and permanently imprinted on the gift, and Is one of a number of identical items you widely distribute. Can 1040x be filed electronically Examples include pens, desk sets, and plastic bags and cases. Can 1040x be filed electronically Signs, display racks, or other promotional material to be used on the business premises of the recipient. Can 1040x be filed electronically    Figure B. Can 1040x be filed electronically When Are Transportation Expenses Deductible? Most employees and self-employed persons can use this chart. Can 1040x be filed electronically (Do not use this chart if your home is your principal place of business. Can 1040x be filed electronically See Office in the home . Can 1040x be filed electronically ) Please click here for the text description of the image. Can 1040x be filed electronically Figure B. Can 1040x be filed electronically When Are Local Transportation Expenses Deductible?TAs for Figure B are: Reg 1. Can 1040x be filed electronically 162-1(a); RR 55–109; RR 94–47 Gift or entertainment. Can 1040x be filed electronically   Any item that might be considered either a gift or entertainment generally will be considered entertainment. Can 1040x be filed electronically However, if you give a customer packaged food or beverages you intend the customer to use at a later date, treat it as a gift. Can 1040x be filed electronically    If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. Can 1040x be filed electronically You can treat the cost of the tickets as either a gift expense or an entertainment expense, whichever is to your advantage. Can 1040x be filed electronically   You can change your treatment of the tickets at a later date by filing an amended return. Can 1040x be filed electronically Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. Can 1040x be filed electronically    If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. Can 1040x be filed electronically You cannot choose, in this case, to treat the cost of the tickets as a gift expense. 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Tax Quotes

When it comes to taxes, everyone has an opinion. These quotes reflect the opinions of their authors; their inclusion here is not an official IRS endorsement of the sentiments expressed.

"Taxes are what we pay for civilized society.'' — Oliver Wendell Holmes, Jr., U.S. Supreme Court Justice

"The power of taxing people and their property is essential to the very existence of government.'' — James Madison, U.S. President

"To tax and to please, no more than to love and to be wise, is not given to men." —  Edmund Burke, 18th Century Irish political philosopher and British statesman

“I am proud to be paying taxes in the United States. The only thing is – I could be just as proud for half the money.” — Arthur Godfrey, entertainer

“People who complain about taxes can be divided into two classes: men and women.” 
— Unknown

"No government can exist without taxation. This money must necessarily be levied on the people; and the grand art consists of levying so as not to oppress.'' — Frederick the Great, 18th Century Prussian king

"Like mothers, taxes are often misunderstood, but seldom forgotten.'' — Lord Bramwell, 19th Century English jurist

"The best measure of a man's honesty isn't his income tax return. It's the zero adjust on his bathroom scale.'' — Arthur C. Clarke, author

"Next to being shot at and missed, nothing is really quite as satisfying as an income tax refund.” — F. J. Raymond, humorist

A tax loophole is "something that benefits the other guy. If it benefits you, it is tax reform.'' 
— Russell B. Long, U.S. Senator

"Few of us ever test our powers of deduction, except when filling out an income tax form.'' 
— Laurence J. Peter, author

“The hardest thing in the world to understand is the income tax.” — Albert Einstein, physicist

“Taxation with representation ain’t so hot either.” — Gerald Barzan, humorist

“Where there is an income tax, the just man will pay more and the unjust less on the same amount of income.” — Plato

“Income tax has made more liars out of the American people than golf.” — Will Rogers, humorist

Page Last Reviewed or Updated: 10-Mar-2014

The Can 1040x Be Filed Electronically

Can 1040x be filed electronically 11. Can 1040x be filed electronically   Casualties, Thefts, and Condemnations Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Casualties and TheftsDeductible losses. Can 1040x be filed electronically Nondeductible losses. Can 1040x be filed electronically Family pet. Can 1040x be filed electronically Progressive deterioration. Can 1040x be filed electronically Decline in market value of stock. Can 1040x be filed electronically Mislaid or lost property. Can 1040x be filed electronically Farming Losses How To Figure a Loss Deduction Limits on Losses of Personal-Use Property When Loss Is Deductible Proof of Loss Figuring a Gain Other Involuntary ConversionsCondemnation Irrigation Project Livestock Losses Tree Seedlings Postponing GainException. Can 1040x be filed electronically Related persons. Can 1040x be filed electronically Replacement Property Replacement Period How To Postpone Gain Disaster Area LossesWho is eligible. Can 1040x be filed electronically Covered disaster area. Can 1040x be filed electronically Reporting Gains and Losses Introduction This chapter explains the tax treatment of casualties, thefts, and condemnations. Can 1040x be filed electronically A casualty occurs when property is damaged, destroyed, or lost due to a sudden, unexpected, or unusual event. Can 1040x be filed electronically A theft occurs when property is stolen. Can 1040x be filed electronically A condemnation occurs when private property is legally taken for public use without the owner's consent. Can 1040x be filed electronically A casualty, theft, or condemnation may result in a deductible loss or taxable gain on your federal income tax return. Can 1040x be filed electronically You may have a deductible loss or a taxable gain even if only a portion of your property was affected by a casualty, theft, or condemnation. Can 1040x be filed electronically An involuntary conversion occurs when you receive money or other property as reimbursement for a casualty, theft, condemnation, disposition of property under threat of condemnation, or certain other events discussed in this chapter. Can 1040x be filed electronically If an involuntary conversion results in a gain and you buy qualified replacement property within the specified replacement period, you can postpone reporting the gain on your income tax return. Can 1040x be filed electronically For more information, see Postponing Gain , later. Can 1040x be filed electronically Topics - This chapter discusses: Casualties and thefts How to figure a loss or gain Other involuntary conversions Postponing gain Disaster area losses Reporting gains and losses Drought involving property connected with a trade or business or a transaction entered into for profit Useful Items - You may want to see: Publication 523 Selling Your Home 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 544 Sales and Other Dispositions of Assets 547 Casualties, Disasters, and Thefts 584 Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property) 584-B Business Casualty, Disaster, and Theft Loss Workbook Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch D (Form 1040) Capital Gains and Losses Sch F (Form 1040) Profit or Loss From Farming 4684 Casualties and Thefts 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. Can 1040x be filed electronically Casualties and Thefts If your property is destroyed, damaged, or stolen, you may have a deductible loss. Can 1040x be filed electronically If the insurance or other reimbursement is more than the adjusted basis of the destroyed, damaged, or stolen property, you may have a taxable gain. Can 1040x be filed electronically Casualty. Can 1040x be filed electronically   A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Can 1040x be filed electronically A sudden event is one that is swift, not gradual or progressive. Can 1040x be filed electronically An unexpected event is one that is ordinarily unanticipated and unintended. Can 1040x be filed electronically 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. Can 1040x be filed electronically Deductible losses. Can 1040x be filed electronically   Deductible casualty losses can result from a number of different causes, including the following. Can 1040x be filed electronically Airplane crashes. Can 1040x be filed electronically Car, truck, or farm equipment accidents not resulting from your willful act or willful negligence. Can 1040x be filed electronically Earthquakes. Can 1040x be filed electronically Fires (but see Nondeductible losses next for exceptions). Can 1040x be filed electronically Floods. Can 1040x be filed electronically Freezing. Can 1040x be filed electronically 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. Can 1040x be filed electronically Lightning. Can 1040x be filed electronically Storms, including hurricanes and tornadoes. Can 1040x be filed electronically Terrorist attacks. Can 1040x be filed electronically Vandalism. Can 1040x be filed electronically Volcanic eruptions. Can 1040x be filed electronically Nondeductible losses. Can 1040x be filed electronically   A casualty loss is not deductible if the damage or destruction is caused by the following. Can 1040x be filed electronically Accidentally breaking articles such as glassware or china under normal conditions. Can 1040x be filed electronically A family pet (explained below). Can 1040x be filed electronically A fire if you willfully set it, or pay someone else to set it. Can 1040x be filed electronically A car, truck, or farm equipment accident if your willful negligence or willful act caused it. Can 1040x be filed electronically The same is true if the willful act or willful negligence of someone acting for you caused the accident. Can 1040x be filed electronically Progressive deterioration (explained below). Can 1040x be filed electronically Family pet. Can 1040x be filed electronically   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed above under Casualty are met. Can 1040x be filed electronically Example. Can 1040x be filed electronically You keep your horse in your yard. Can 1040x be filed electronically The ornamental fruit trees in your yard were damaged when your horse stripped the bark from them. Can 1040x be filed electronically Some of the trees were completely girdled and died. Can 1040x be filed electronically Because the damage was not unexpected or unusual, the loss is not deductible. Can 1040x be filed electronically Progressive deterioration. Can 1040x be filed electronically   Loss of property due to progressive deterioration is not deductible as a casualty loss. Can 1040x be filed electronically This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Can 1040x be filed electronically Examples of damage due to progressive deterioration include damage from rust, corrosion, or termites. Can 1040x be filed electronically However, weather-related conditions or disease may cause another type of involuntary conversion. Can 1040x be filed electronically See Other Involuntary Conversions , later. Can 1040x be filed electronically Theft. Can 1040x be filed electronically   A theft is the taking and removing of money or property with the intent to deprive the owner of it. Can 1040x be filed electronically The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent. Can 1040x be filed electronically You do not need to show a conviction for theft. Can 1040x be filed electronically   Theft includes the taking of money or property by the following means: Blackmail, Burglary, Embezzlement, Extortion, Kidnapping for ransom, Larceny, Robbery, or Threats. Can 1040x be filed electronically The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Can 1040x be filed electronically Decline in market value of stock. Can 1040x be filed electronically   You cannot deduct as a theft loss the decline in market value of stock acquired on the open market for investment if the decline is caused by disclosure of accounting fraud or other illegal misconduct by the officers or directors of the corporation that issued the stock. Can 1040x be filed electronically However, you can deduct as a capital loss the loss you sustain when you sell or exchange the stock or the stock becomes completely worthless. Can 1040x be filed electronically You report a capital loss on Schedule D (Form 1040). Can 1040x be filed electronically For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Can 1040x be filed electronically Mislaid or lost property. Can 1040x be filed electronically   The simple disappearance of money or property is not a theft. Can 1040x be filed electronically However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. Can 1040x be filed electronically Example. Can 1040x be filed electronically A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Can 1040x be filed electronically The diamond falls from the ring and is never found. Can 1040x be filed electronically The loss of the diamond is a casualty. Can 1040x be filed electronically Farming Losses You can deduct certain casualty or theft losses that occur in the business of farming. Can 1040x be filed electronically The following is a discussion of some losses you can deduct and some you cannot deduct. Can 1040x be filed electronically Livestock or produce bought for resale. Can 1040x be filed electronically   Casualty or theft losses of livestock or produce bought for resale are deductible if you report your income on the cash method. Can 1040x be filed electronically If you report your income on an accrual method, take casualty and theft losses on property bought for resale by omitting the item from the closing inventory for the year of the loss. Can 1040x be filed electronically You cannot take a separate deduction. Can 1040x be filed electronically Livestock, plants, produce, and crops raised for sale. Can 1040x be filed electronically   Losses of livestock, plants, produce, and crops raised for sale are generally not deductible if you report your income on the cash method. Can 1040x be filed electronically You have already deducted the cost of raising these items as farm expenses, so their basis is equal to zero. Can 1040x be filed electronically   For plants with a preproductive period of more than 2 years, you may have a deductible loss if you have a tax basis in the plants. Can 1040x be filed electronically You usually have a tax basis if you capitalized the expenses associated with these plants under the uniform capitalization rules. Can 1040x be filed electronically The uniform capitalization rules are discussed in chapter 6. Can 1040x be filed electronically   If you report your income on an accrual method, casualty or theft losses are deductible only if you included the items in your inventory at the beginning of your tax year. Can 1040x be filed electronically You get the deduction by omitting the item from your inventory at the close of your tax year. Can 1040x be filed electronically You cannot take a separate casualty or theft deduction. Can 1040x be filed electronically Income loss. Can 1040x be filed electronically   A loss of future income is not deductible. Can 1040x be filed electronically Example. Can 1040x be filed electronically A severe flood destroyed your crops. Can 1040x be filed electronically Because you are a cash method taxpayer and already deducted the cost of raising the crops as farm expenses, this loss is not deductible, as explained above under Livestock, plants, produce, and crops raised for sale . Can 1040x be filed electronically You estimate that the crop loss will reduce your farm income by $25,000. Can 1040x be filed electronically This loss of future income is also not deductible. Can 1040x be filed electronically Loss of timber. Can 1040x be filed electronically   If you sell timber downed as a result of a casualty, treat the proceeds from the sale as a reimbursement. Can 1040x be filed electronically If you use the proceeds to buy qualified replacement property, you can postpone reporting the gain. Can 1040x be filed electronically See Postponing Gain , later. Can 1040x be filed electronically Property used in farming. Can 1040x be filed electronically   Casualty and theft losses of property used in your farm business usually result in deductible losses. Can 1040x be filed electronically If a fire or storm destroyed your barn, or you lose by casualty or theft an animal you bought for draft, breeding, dairy, or sport, you may have a deductible loss. Can 1040x be filed electronically See How To Figure a Loss , later. Can 1040x be filed electronically Raised draft, breeding, dairy, or sporting animals. Can 1040x be filed electronically   Generally, losses of raised draft, breeding, dairy, or sporting animals do not result in deductible casualty or theft losses because you have no basis in the animals. Can 1040x be filed electronically However, you may have a basis in the animal and therefore may be able to claim a deduction if either of the following situations applies to you. Can 1040x be filed electronically You use inventories to determine your income and you included the animals in your inventory. Can 1040x be filed electronically You capitalized the expenses associated with the animals under the uniform capitalization rules and therefore have a tax basis in the animals subject to a casualty or theft. Can 1040x be filed electronically When you include livestock in inventory, its last inventory value is its basis. Can 1040x be filed electronically When you lose an inventoried animal held for draft, breeding, dairy, or sport by casualty or theft during the year, decrease ending inventory by the amount you included in inventory for the animal. Can 1040x be filed electronically You cannot take a separate deduction. Can 1040x be filed electronically How To Figure a Loss How you figure a deductible casualty or theft loss depends on whether the loss was to farm or personal-use property and whether the property was stolen or partly or completely destroyed. Can 1040x be filed electronically Farm property. Can 1040x be filed electronically   Farm property is the property you use in your farming business. Can 1040x be filed electronically If your farm property was completely destroyed or stolen, your loss is figured as follows:      Your adjusted basis in the property     MINUS     Any salvage value     MINUS     Any insurance or other reimbursement you  receive or expect to receive      You can use the schedules in Publication 584-B to list your stolen, damaged, or destroyed business property and to figure your loss. Can 1040x be filed electronically   If your farm property was partially damaged, use the steps shown under Personal-use property next to figure your casualty loss. Can 1040x be filed electronically However, the deduction limits, discussed later, do not apply to farm property. Can 1040x be filed electronically Personal-use property. Can 1040x be filed electronically   Personal-use property is property used by you or your family members for personal purposes and not used in your farm business or for income-producing purposes. Can 1040x be filed electronically The following items are examples of personal-use property: Your main home. Can 1040x be filed electronically Furniture and electronics used in your main home and not used in a home office or for business purposes. Can 1040x be filed electronically Clothing and jewelry. Can 1040x be filed electronically An automobile used for nonbusiness purposes. Can 1040x be filed electronically You figure the casualty or theft loss on this property by taking the following steps. Can 1040x be filed electronically Determine your adjusted basis in the property before the casualty or theft. Can 1040x be filed electronically Determine the decrease in fair market value of the property as a result of the casualty or theft. Can 1040x be filed electronically From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you receive or expect to receive. Can 1040x be filed electronically You must apply the deduction limits, discussed later, to determine your deductible loss. Can 1040x be filed electronically    You can use Publication 584 to list your stolen or damaged personal-use property and figure your loss. Can 1040x be filed electronically It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. Can 1040x be filed electronically Adjusted basis. Can 1040x be filed electronically   Adjusted basis is your basis (usually cost) increased or decreased by various events, such as improvements and casualty losses. Can 1040x be filed electronically For more information about adjusted basis, see chapter 6. Can 1040x be filed electronically Decrease in fair market value (FMV). Can 1040x be filed electronically   The decrease in FMV is the difference between the property's value immediately before the casualty or theft and its value immediately afterward. Can 1040x be filed electronically FMV is defined in chapter 10 under Payments Received or Considered Received . Can 1040x be filed electronically Appraisal. Can 1040x be filed electronically   To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Can 1040x be filed electronically But other measures, such as the cost of cleaning up or making repairs (discussed next) can be used to establish decreases in FMV. Can 1040x be filed electronically   An appraisal to determine the difference between the FMV of the property immediately before a casualty or theft and immediately afterward should be made by a competent appraiser. Can 1040x be filed electronically The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Can 1040x be filed electronically This information is needed to limit any deduction to the actual loss resulting from damage to the property. Can 1040x be filed electronically Cost of cleaning up or making repairs. Can 1040x be filed electronically   The cost of cleaning up after a casualty is not part of a casualty loss. Can 1040x be filed electronically Neither is the cost of repairing damaged property after a casualty. Can 1040x be filed electronically But you can use the cost of cleaning up or making repairs after a casualty as a measure of the decrease in FMV if you meet all the following conditions. Can 1040x be filed electronically The repairs are actually made. Can 1040x be filed electronically The repairs are necessary to bring the property back to its condition before the casualty. Can 1040x be filed electronically The amount spent for repairs is not excessive. Can 1040x be filed electronically The repairs fix the damage only. Can 1040x be filed electronically The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Can 1040x be filed electronically Related expenses. Can 1040x be filed electronically   The incidental expenses due to a casualty or theft, such as expenses for the treatment of personal injuries, temporary housing, or a rental car, are not part of your casualty or theft loss. Can 1040x be filed electronically However, they may be deductible as farm business expenses if the damaged or stolen property is farm property. Can 1040x be filed electronically Separate computations for more than one item of property. Can 1040x be filed electronically   Generally, if a single casualty or theft involves more than one item of property, you must figure your loss separately for each item of property. Can 1040x be filed electronically Then combine the losses to determine your total loss. Can 1040x be filed electronically    There is an exception to this rule for personal-use real property. Can 1040x be filed electronically See Exception for personal-use real property, later. Can 1040x be filed electronically Example. Can 1040x be filed electronically A fire on your farm damaged a tractor and the barn in which it was stored. Can 1040x be filed electronically The tractor had an adjusted basis of $3,300. Can 1040x be filed electronically Its FMV was $28,000 just before the fire and $10,000 immediately afterward. Can 1040x be filed electronically The barn had an adjusted basis of $28,000. Can 1040x be filed electronically Its FMV was $55,000 just before the fire and $25,000 immediately afterward. Can 1040x be filed electronically You received insurance reimbursements of $2,100 on the tractor and $26,000 on the barn. Can 1040x be filed electronically Figure your deductible casualty loss separately for the two items of property. Can 1040x be filed electronically     Tractor Barn 1) Adjusted basis $3,300 $28,000 2) FMV before fire $28,000 $55,000 3) FMV after fire 10,000 25,000 4) Decrease in FMV  (line 2 − line 3) $18,000 $30,000 5) Loss (lesser of line 1 or line 4) $3,300 $28,000 6) Minus: Insurance 2,100 26,000 7) Deductible casualty loss $1,200 $2,000 8) Total deductible casualty loss $3,200 Exception for personal-use real property. Can 1040x be filed electronically   In figuring a casualty loss on personal-use real property, the entire property (including any improvements, such as buildings, trees, and shrubs) is treated as one item. Can 1040x be filed electronically Figure the loss using the smaller of the following. Can 1040x be filed electronically The decrease in FMV of the entire property. Can 1040x be filed electronically The adjusted basis of the entire property. Can 1040x be filed electronically Example. Can 1040x be filed electronically You bought a farm in 1990 for $160,000. Can 1040x be filed electronically The adjusted basis of the residential part is now $128,000. Can 1040x be filed electronically In 2013, a windstorm blew down shade trees and three ornamental trees planted at a cost of $7,500 on the residential part. Can 1040x be filed electronically The adjusted basis of the residential part includes the $7,500. Can 1040x be filed electronically The fair market value (FMV) of the residential part immediately before the storm was $400,000, and $385,000 immediately after the storm. Can 1040x be filed electronically The trees were not covered by insurance. Can 1040x be filed electronically 1) Adjusted basis $128,000 2) FMV before the storm $400,000 3) FMV after the storm 385,000 4) Decrease in FMV (line 2 − line 3) $15,000 5) Loss before insurance (lesser of line 1 or line 4) $15,000 6) Minus: Insurance -0- 7) Amount of loss $15,000 Insurance and other reimbursements. Can 1040x be filed electronically   If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Can 1040x be filed electronically You do not have a casualty or theft loss to the extent you are reimbursed. Can 1040x be filed electronically   If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Can 1040x be filed electronically You must reduce your loss even if you do not receive payment until a later tax year. Can 1040x be filed electronically    Do not subtract from your loss any insurance payments you receive for living expenses if you lose the use of your main home or are denied access to it because of a casualty. Can 1040x be filed electronically You may have to include a portion of these payments in your income. Can 1040x be filed electronically See Insurance payments for living expenses in Publication 547 for details. Can 1040x be filed electronically Disaster relief. Can 1040x be filed electronically   Food, medical supplies, and other forms of assistance you receive do not reduce your casualty loss, unless they are replacements for lost or destroyed property. Can 1040x be filed electronically Excludable cash gifts you receive also do not reduce your casualty loss if there are no limits on how you can use the money. Can 1040x be filed electronically   Generally, disaster relief grants received under the Robert T. Can 1040x be filed electronically Stafford Disaster Relief and Emergency Assistance Act are not included in your income. Can 1040x be filed electronically See Federal disaster relief grants , later, under Disaster Area Losses . Can 1040x be filed electronically   Qualified disaster relief payments for expenses you incurred as a result of a federally declared disaster are not taxable income to you. Can 1040x be filed electronically See Qualified disaster relief payments , later, under Disaster Area Losses . Can 1040x be filed electronically Reimbursement received after deducting loss. Can 1040x be filed electronically   If you figure your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement. Can 1040x be filed electronically Actual reimbursement less than expected. Can 1040x be filed electronically   If you later receive less reimbursement than you expected, include that difference as a loss with your other losses (if any) on your return for the year in which you can reasonably expect no more reimbursement. Can 1040x be filed electronically Actual reimbursement more than expected. Can 1040x be filed electronically   If you later receive more reimbursement than you expected after you have claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. Can 1040x be filed electronically However, if any part of your original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. Can 1040x be filed electronically Do not refigure your tax for the year you claimed the deduction. Can 1040x be filed electronically See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. Can 1040x be filed electronically If the total of all the reimbursements you receive is more than your adjusted basis in the destroyed or stolen property, you will have a gain on the casualty or theft. Can 1040x be filed electronically See Figuring a Gain in Publication 547 for information on how to treat a gain from the reimbursement you receive because of a casualty or theft. Can 1040x be filed electronically Actual reimbursement same as expected. Can 1040x be filed electronically   If you receive exactly the reimbursement you expected to receive, you do not have to include any of the reimbursement in your income and you cannot deduct any additional loss. Can 1040x be filed electronically Lump-sum reimbursement. Can 1040x be filed electronically   If you have a casualty or theft loss of several assets at the same time without an allocation of reimbursement to specific assets, divide the lump-sum reimbursement among the assets according to the fair market value of each asset at the time of the loss. Can 1040x be filed electronically Figure the gain or loss separately for each asset that has a separate basis. Can 1040x be filed electronically Adjustments to basis. Can 1040x be filed electronically   If you have a casualty or theft loss, you must decrease your basis in the property by any insurance or other reimbursement you receive and by any deductible loss. Can 1040x be filed electronically The result is your adjusted basis in the property. Can 1040x be filed electronically Amounts you spend on repairs to restore your property to its pre-casualty condition increase your adjusted basis. Can 1040x be filed electronically See Adjusted Basis in chapter 6 for more information. Can 1040x be filed electronically Example. Can 1040x be filed electronically You built a new silo for $25,000. Can 1040x be filed electronically This is the basis in your silo because that is the total cost you incurred to build it. Can 1040x be filed electronically During the year, a tornado damaged your silo and your allowable casualty loss deduction was $1,000. Can 1040x be filed electronically In addition, your insurance company reimbursed you $4,000 for the damage and you spent $6,000 to restore the silo to its pre-casualty condition. Can 1040x be filed electronically Your adjusted basis in the silo after the casualty is $26,000 ($25,000 - $1,000 - $4,000 + $6,000). Can 1040x be filed electronically Deduction Limits on Losses of Personal-Use Property Casualty and theft losses of property held for personal use may be deductible if you itemize deductions on Schedule A (Form 1040). Can 1040x be filed electronically There are two limits on the deduction for casualty or theft loss of personal-use property. Can 1040x be filed electronically You figure these limits on Form 4684. Can 1040x be filed electronically $100 rule. Can 1040x be filed electronically   You must reduce each casualty or theft loss on personal-use property by $100. Can 1040x be filed electronically This rule applies after you have subtracted any reimbursement. Can 1040x be filed electronically 10% rule. Can 1040x be filed electronically   You must further reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Can 1040x be filed electronically Apply this rule after you reduce each loss by $100. Can 1040x be filed electronically Adjusted gross income is on line 38 of Form 1040. Can 1040x be filed electronically Example. Can 1040x be filed electronically In June, you discovered that your house had been burglarized. Can 1040x be filed electronically Your loss after insurance reimbursement was $2,000. Can 1040x be filed electronically Your adjusted gross income for the year you discovered the burglary is $57,000. Can 1040x be filed electronically Figure your theft loss deduction as follows: 1. Can 1040x be filed electronically Loss after insurance $2,000 2. Can 1040x be filed electronically Subtract $100 100 3. Can 1040x be filed electronically Loss after $100 rule $1,900 4. Can 1040x be filed electronically Subtract 10% (. Can 1040x be filed electronically 10) × $57,000 AGI $5,700 5. Can 1040x be filed electronically Theft loss deduction -0- You do not have a theft loss deduction because your loss ($1,900) is less than 10% of your adjusted gross income ($5,700). Can 1040x be filed electronically    If you have a casualty or theft gain in addition to a loss, you will have to make a special computation before you figure your 10% limit. Can 1040x be filed electronically See 10% Rule in Publication 547. Can 1040x be filed electronically When Loss Is Deductible Generally, you can deduct casualty losses that are not reimbursable only in the tax year in which they occur. Can 1040x be filed electronically You generally can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. Can 1040x be filed electronically However, losses in federally declared disaster areas are subject to different rules. Can 1040x be filed electronically See Disaster Area Losses , later, for an exception. Can 1040x be filed electronically If you are not sure whether part of your casualty or theft loss will be reimbursed, do not deduct that part until the tax year when you become reasonably certain that it will not be reimbursed. Can 1040x be filed electronically Leased property. Can 1040x be filed electronically   If you lease property from someone else, you can deduct a loss on the property in the year your liability for the loss is fixed. Can 1040x be filed electronically This is true even if the loss occurred or the liability was paid in a different year. Can 1040x be filed electronically You are not entitled to a deduction until your liability under the lease can be determined with reasonable accuracy. Can 1040x be filed electronically Your liability can be determined when a claim for recovery is settled, adjudicated, or abandoned. Can 1040x be filed electronically Example. Can 1040x be filed electronically Robert leased a tractor from First Implement, Inc. Can 1040x be filed electronically , for use in his farm business. Can 1040x be filed electronically The tractor was destroyed by a tornado in June 2012. Can 1040x be filed electronically The loss was not insured. Can 1040x be filed electronically First Implement billed Robert for the fair market value of the tractor on the date of the loss. Can 1040x be filed electronically Robert disagreed with the bill and refused to pay it. Can 1040x be filed electronically First Implement later filed suit in court against Robert. Can 1040x be filed electronically In 2013, Robert and First Implement agreed to settle the suit for $20,000, and the court entered a judgment in favor of First Implement. Can 1040x be filed electronically Robert paid $20,000 in June 2013. Can 1040x be filed electronically He can claim the $20,000 as a loss on his 2013 tax return. Can 1040x be filed electronically Net operating loss (NOL). Can 1040x be filed electronically   If your deductions, including casualty or theft loss deductions, are more than your income for the year, you may have an NOL. Can 1040x be filed electronically An NOL can be carried back or carried forward and deducted from income in other years. Can 1040x be filed electronically See Publication 536 for more information on NOLs. Can 1040x be filed electronically Proof of Loss To deduct a casualty or theft loss, you must be able to prove that there was a casualty or theft. Can 1040x be filed electronically You must have records to support the amount you claim for the loss. Can 1040x be filed electronically Casualty loss proof. Can 1040x be filed electronically   For a casualty loss, your records should show all the following information. Can 1040x be filed electronically The type of casualty (car accident, fire, storm, etc. Can 1040x be filed electronically ) and when it occurred. Can 1040x be filed electronically That the loss was a direct result of the casualty. Can 1040x be filed electronically That you were the owner of the property or, if you leased the property from someone else, that you were contractually liable to the owner for the damage. Can 1040x be filed electronically Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Can 1040x be filed electronically Theft loss proof. Can 1040x be filed electronically   For a theft loss, your records should show all the following information. Can 1040x be filed electronically When you discovered your property was missing. Can 1040x be filed electronically That your property was stolen. Can 1040x be filed electronically That you were the owner of the property. Can 1040x be filed electronically Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Can 1040x be filed electronically Figuring a Gain A casualty or theft may result in a taxable gain. Can 1040x be filed electronically If you receive an insurance payment or other reimbursement that is more than your adjusted basis in the destroyed, damaged, or stolen property, you have a gain from the casualty or theft. Can 1040x be filed electronically You generally report your gain as income in the year you receive the reimbursement. Can 1040x be filed electronically However, depending on the type of property you receive, you may not have to report your gain. Can 1040x be filed electronically See Postponing Gain , later. Can 1040x be filed electronically Your gain is figured as follows: The amount you receive, minus Your adjusted basis in the property at the time of the casualty or theft. Can 1040x be filed electronically Even if the decrease in FMV of your property is smaller than the adjusted basis of your property, use your adjusted basis to figure the gain. Can 1040x be filed electronically Amount you receive. Can 1040x be filed electronically   The amount you receive includes any money plus the value of any property you receive, minus any expenses you have in obtaining reimbursement. Can 1040x be filed electronically It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. Can 1040x be filed electronically Example. Can 1040x be filed electronically A tornado severely damaged your barn. Can 1040x be filed electronically The adjusted basis of the barn was $25,000. Can 1040x be filed electronically Your insurance company reimbursed you $40,000 for the damaged barn. Can 1040x be filed electronically However, you had legal expenses of $2,000 to collect that insurance. Can 1040x be filed electronically Your insurance minus your expenses to collect the insurance is more than your adjusted basis in the barn, so you have a gain. Can 1040x be filed electronically 1) Insurance reimbursement $40,000 2) Legal expenses 2,000 3) Amount received  (line 1 − line 2) $38,000 4) Adjusted basis 25,000 5) Gain on casualty (line 3 − line 4) $13,000 Other Involuntary Conversions In addition to casualties and thefts, other events cause involuntary conversions of property. Can 1040x be filed electronically Some of these are discussed in the following paragraphs. Can 1040x be filed electronically Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes. Can 1040x be filed electronically You report the gain or deduct the loss on your tax return for the year you realize it. Can 1040x be filed electronically However, depending on the type of property you receive, you may not have to report your gain on the involuntary conversion. Can 1040x be filed electronically See Postponing Gain , later. Can 1040x be filed electronically Condemnation Condemnation is the process by which private property is legally taken for public use without the owner's consent. Can 1040x be filed electronically The property may be taken by the federal government, a state government, a political subdivision, or a private organization that has the power to legally take property. Can 1040x be filed electronically The owner receives a condemnation award (money or property) in exchange for the property taken. Can 1040x be filed electronically A condemnation is a forced sale, the owner being the seller and the condemning authority being the buyer. Can 1040x be filed electronically Threat of condemnation. Can 1040x be filed electronically   Treat the sale of your property under threat of condemnation as a condemnation, provided you have reasonable grounds to believe that your property will be condemned. Can 1040x be filed electronically Main home condemned. Can 1040x be filed electronically   If you have a gain because your main home is condemned, you generally can exclude the gain from your income as if you had sold or exchanged your home. Can 1040x be filed electronically For information on this exclusion, see Publication 523. Can 1040x be filed electronically If your gain is more than the amount you can exclude, but you buy replacement property, you may be able to postpone reporting the excess gain. Can 1040x be filed electronically See Postponing Gain , later. Can 1040x be filed electronically (You cannot deduct a loss from the condemnation of your main home. Can 1040x be filed electronically ) More information. Can 1040x be filed electronically   For information on how to figure the gain or loss on condemned property, see chapter 1 in Publication 544. Can 1040x be filed electronically Also see Postponing Gain , later, to find out if you can postpone reporting the gain. Can 1040x be filed electronically Irrigation Project The sale or other disposition of property located within an irrigation project to conform to the acreage limits of federal reclamation laws is an involuntary conversion. Can 1040x be filed electronically Livestock Losses Diseased livestock. Can 1040x be filed electronically   If your livestock die from disease, or are destroyed, sold, or exchanged because of disease, even though the disease is not of epidemic proportions, treat these occurrences as involuntary conversions. Can 1040x be filed electronically If the livestock were raised or purchased for resale, follow the rules for livestock discussed earlier under Farming Losses . Can 1040x be filed electronically Otherwise, figure the gain or loss from these conversions using the rules discussed under Determining Gain or Loss in chapter 8. Can 1040x be filed electronically If you replace the livestock, you may be able to postpone reporting the gain. Can 1040x be filed electronically See Postponing Gain below. Can 1040x be filed electronically Reporting dispositions of diseased livestock. Can 1040x be filed electronically   If you choose to postpone reporting gain on the disposition of diseased livestock, you must attach a statement to your return explaining that the livestock were disposed of because of disease. Can 1040x be filed electronically You must also include other information on this statement. Can 1040x be filed electronically See How To Postpone Gain , later, under Postponing Gain . Can 1040x be filed electronically Weather-related sales of livestock. Can 1040x be filed electronically   If you sell or exchange livestock (other than poultry) held for draft, breeding, or dairy purposes solely because of drought, flood, or other weather-related conditions, treat the sale or exchange as an involuntary conversion. Can 1040x be filed electronically Only livestock sold in excess of the number you normally would sell under usual business practice, in the absence of weather-related conditions, are considered involuntary conversions. Can 1040x be filed electronically Figure the gain or loss using the rules discussed under Determining Gain or Loss in chapter 8. Can 1040x be filed electronically If you replace the livestock, you may be able to postpone reporting the gain. Can 1040x be filed electronically See Postponing Gain below. Can 1040x be filed electronically Example. Can 1040x be filed electronically It is your usual business practice to sell five of your dairy animals during the year. Can 1040x be filed electronically This year you sold 20 dairy animals because of drought. Can 1040x be filed electronically The sale of 15 animals is treated as an involuntary conversion. Can 1040x be filed electronically    If you do not replace the livestock, you may be able to report the gain in the following year's income. Can 1040x be filed electronically This rule also applies to other livestock (including poultry). Can 1040x be filed electronically See Sales Caused by Weather-Related Conditions in chapter 3. Can 1040x be filed electronically Tree Seedlings If, because of an abnormal drought, the failure of planted tree seedlings is greater than normally anticipated, you may have a deductible loss. Can 1040x be filed electronically Treat the loss as a loss from an involuntary conversion. Can 1040x be filed electronically The loss equals the previously capitalized reforestation costs you had to duplicate on replanting. Can 1040x be filed electronically You deduct the loss on the return for the year the seedlings died. Can 1040x be filed electronically Postponing Gain Do not report a gain if you receive reimbursement in the form of property similar or related in service or use to the destroyed, stolen, or other involuntarily converted property. Can 1040x be filed electronically Your basis in the new property is generally the same as your adjusted basis in the property it replaces. Can 1040x be filed electronically You must ordinarily report the gain on your stolen, destroyed, or other involuntarily converted property if you receive money or unlike property as reimbursement. Can 1040x be filed electronically However, you can choose to postpone reporting the gain if you purchase replacement property similar or related in service or use to your destroyed, stolen, or other involuntarily converted property within a specific replacement period. Can 1040x be filed electronically If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. Can 1040x be filed electronically To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. Can 1040x be filed electronically If the cost of the replacement property is less than the reimbursement, you must include the gain in your income up to the amount of the unspent reimbursement. Can 1040x be filed electronically Example 1. Can 1040x be filed electronically In 1985, you constructed a barn to store farm equipment at a cost of $20,000. Can 1040x be filed electronically In 1987, you added a silo to the barn at a cost of $15,000 to store grain. Can 1040x be filed electronically In May of this year, the property was worth $100,000. Can 1040x be filed electronically In June the barn and silo were destroyed by a tornado. Can 1040x be filed electronically At the time of the tornado, you had an adjusted basis of $0 in the property. Can 1040x be filed electronically You received $85,000 from the insurance company. Can 1040x be filed electronically You had a gain of $85,000 ($85,000 – $0). Can 1040x be filed electronically You spent $80,000 to rebuild the barn and silo. Can 1040x be filed electronically Since this is less than the insurance proceeds received, you must include $5,000 ($85,000 – $80,000) in your income. Can 1040x be filed electronically Example 2. Can 1040x be filed electronically In 1970, you bought a cabin in the mountains for your personal use at a cost of $18,000. Can 1040x be filed electronically You made no further improvements or additions to it. Can 1040x be filed electronically When a storm destroyed the cabin this January, the cabin was worth $250,000. Can 1040x be filed electronically You received $146,000 from the insurance company in March. Can 1040x be filed electronically You had a gain of $128,000 ($146,000 − $18,000). Can 1040x be filed electronically You spent $144,000 to rebuild the cabin. Can 1040x be filed electronically Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. Can 1040x be filed electronically Buying replacement property from a related person. Can 1040x be filed electronically   You cannot postpone reporting a gain from a casualty, theft, or other involuntary conversion if you buy the replacement property from a related person (discussed later). Can 1040x be filed electronically This rule applies to the following taxpayers. Can 1040x be filed electronically C corporations. Can 1040x be filed electronically Partnerships in which more than 50% of the capital or profits interest is owned by C corporations. Can 1040x be filed electronically Individuals, partnerships (other than those in (2) above), and S corporations if the total realized gain for the tax year on all involuntarily converted properties on which there are realized gains is more than $100,000. Can 1040x be filed electronically For involuntary conversions described in (3) above, gains cannot be offset by any losses when determining whether the total gain is more than $100,000. Can 1040x be filed electronically If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. Can 1040x be filed electronically If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. Can 1040x be filed electronically Exception. Can 1040x be filed electronically   This rule does not apply if the related person acquired the property from an unrelated person within the period of time allowed for replacing the involuntarily converted property. Can 1040x be filed electronically Related persons. Can 1040x be filed electronically   Under this rule, related persons include, for example, a parent and child, a brother and sister, a corporation and an individual who owns more than 50% of its outstanding stock, and two partnerships in which the same C corporations own more than 50% of the capital or profits interests. Can 1040x be filed electronically For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Can 1040x be filed electronically Death of a taxpayer. Can 1040x be filed electronically   If a taxpayer dies after having a gain, but before buying replacement property, the gain must be reported for the year in which the decedent realized the gain. Can 1040x be filed electronically The executor of the estate or the person succeeding to the funds from the involuntary conversion cannot postpone reporting the gain by buying replacement property. Can 1040x be filed electronically Replacement Property You must buy replacement property for the specific purpose of replacing your property. Can 1040x be filed electronically Your replacement property must be similar or related in service or use to the property it replaces. Can 1040x be filed electronically You do not have to use the same funds you receive as reimbursement for your old property to acquire the replacement property. Can 1040x be filed electronically If you spend the money you receive for other purposes, and borrow money to buy replacement property, you can still choose to postpone reporting the gain if you meet the other requirements. Can 1040x be filed electronically Property you acquire by gift or inheritance does not qualify as replacement property. Can 1040x be filed electronically Owner-user. Can 1040x be filed electronically   If you are an owner-user, similar or related in service or use means that replacement property must function in the same way as the property it replaces. Can 1040x be filed electronically Examples of property that functions in the same way as the property it replaces are a home that replaces another home, a dairy cow that replaces another dairy cow, and farm land that replaces other farm land. Can 1040x be filed electronically A grinding mill that replaces a tractor does not qualify. Can 1040x be filed electronically Neither does a breeding or draft animal that replaces a dairy cow. Can 1040x be filed electronically Soil or other environmental contamination. Can 1040x be filed electronically   If, because of soil or other environmental contamination, it is not feasible for you to reinvest your insurance money or other proceeds from destroyed or damaged livestock in property similar or related in service or use to the livestock, you can treat other property (including real property) used for farming purposes, as property similar or related in service or use to the destroyed or damaged livestock. Can 1040x be filed electronically Weather-related conditions. Can 1040x be filed electronically   If, because of drought, flood, or other weather-related conditions, it is not feasible for you to reinvest the insurance money or other proceeds in property similar or related in service or use to the livestock, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the livestock you disposed of. Can 1040x be filed electronically Example. Can 1040x be filed electronically Each year you normally sell 25 cows from your beef herd. Can 1040x be filed electronically However, this year you had to sell 50 cows. Can 1040x be filed electronically This is because a severe drought significantly reduced the amount of hay and pasture yield needed to feed your herd for the rest of the year. Can 1040x be filed electronically Because, as a result of the severe drought, it is not feasible for you to use the proceeds from selling the extra cows to buy new cows, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the cows you sold. Can 1040x be filed electronically Standing crop destroyed by casualty. Can 1040x be filed electronically   If a storm or other casualty destroyed your standing crop and you use the insurance money to acquire either another standing crop or a harvested crop, this purchase qualifies as replacement property. Can 1040x be filed electronically The costs of planting and raising a new crop qualify as replacement costs for the destroyed crop only if you use the crop method of accounting (discussed in chapter 2). Can 1040x be filed electronically In that case, the costs of bringing the new crop to the same level of maturity as the destroyed crop qualify as replacement costs to the extent they are incurred during the replacement period. Can 1040x be filed electronically Timber loss. Can 1040x be filed electronically   Standing timber you bought with the proceeds from the sale of timber downed as a result of a casualty, such as high winds, earthquakes, or volcanic eruptions, qualifies as replacement property. Can 1040x be filed electronically If you bought the standing timber within the replacement period, you can postpone reporting the gain. Can 1040x be filed electronically Business or income-producing property located in a federally declared disaster area. Can 1040x be filed electronically   If your destroyed business or income-producing property was located in a federally declared disaster area, any tangible replacement property you acquire for use in any business is treated as similar or related in service or use to the destroyed property. Can 1040x be filed electronically For more information, see Disaster Area Losses in Publication 547. Can 1040x be filed electronically Substituting replacement property. Can 1040x be filed electronically   Once you have acquired qualified replacement property that you designate as replacement property in a statement attached to your tax return, you cannot substitute other qualified replacement property. Can 1040x be filed electronically This is true even if you acquire the other property within the replacement period. Can 1040x be filed electronically However, if you discover that the original replacement property was not qualified replacement property, you can, within the replacement period, substitute the new qualified replacement property. Can 1040x be filed electronically Basis of replacement property. Can 1040x be filed electronically   You must reduce the basis of your replacement property (its cost) by the amount of postponed gain. Can 1040x be filed electronically In this way, tax on the gain is postponed until you dispose of the replacement property. Can 1040x be filed electronically Replacement Period To postpone reporting your gain, you must buy replacement property within a specified period of time. Can 1040x be filed electronically This is the replacement period. Can 1040x be filed electronically The replacement period begins on the date your property was damaged, destroyed, stolen, sold, or exchanged. Can 1040x be filed electronically The replacement period generally ends 2 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. Can 1040x be filed electronically Example. Can 1040x be filed electronically You are a calendar year taxpayer. Can 1040x be filed electronically While you were on vacation, farm equipment that cost $2,200 was stolen from your farm. Can 1040x be filed electronically You discovered the theft when you returned to your farm on November 11, 2012. Can 1040x be filed electronically Your insurance company investigated the theft and did not settle your claim until January 5, 2013, when they paid you $3,000. Can 1040x be filed electronically You first realized a gain from the reimbursement for the theft during 2013, so you have until December 31, 2015, to replace the property. Can 1040x be filed electronically Main home in disaster area. Can 1040x be filed electronically   For your main home (or its contents) located in a federally declared disaster area, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. Can 1040x be filed electronically See Disaster Area Losses , later. Can 1040x be filed electronically Property in the Midwestern disaster areas. Can 1040x be filed electronically   For property located in the Midwestern disaster areas (defined in Table 4 in the 2008 Publication 547) that was destroyed, damaged, stolen, or condemned, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Can 1040x be filed electronically This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Midwestern disaster areas. Can 1040x be filed electronically Property in the Kansas disaster area. Can 1040x be filed electronically   For property located in the Kansas disaster area that was destroyed, damaged, stolen, or condemned after May 3, 2007, as a result of the Kansas storms and tornadoes, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Can 1040x be filed electronically This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Kansas disaster area. Can 1040x be filed electronically Property in the Hurricane Katrina disaster area. Can 1040x be filed electronically   For property located in the Hurricane Katrina disaster area that was destroyed, damaged, stolen, or condemned after August 24, 2005, as a result of Hurricane Katrina, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Can 1040x be filed electronically This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. Can 1040x be filed electronically Weather-related sales of livestock in an area eligible for federal assistance. Can 1040x be filed electronically   For the sale or exchange of livestock due to drought, flood, or other weather-related conditions in an area eligible for federal assistance, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the sale or exchange. Can 1040x be filed electronically The IRS may extend the replacement period on a regional basis if the weather-related conditions continue for longer than 3 years. Can 1040x be filed electronically   For information on extensions of the replacement period because of persistent drought, see Notice 2006-82, 2006-39 I. Can 1040x be filed electronically R. Can 1040x be filed electronically B. Can 1040x be filed electronically 529, available at  www. Can 1040x be filed electronically irs. Can 1040x be filed electronically gov/irb/2006-39_IRB/ar11. Can 1040x be filed electronically html. Can 1040x be filed electronically For a list of counties for which exceptional, extreme, or severe drought was reported during the 12 months ending August 31, 2013, see Notice 2013-62, available at IRS. Can 1040x be filed electronically gov. Can 1040x be filed electronically Condemnation. Can 1040x be filed electronically   The replacement period for a condemnation begins on the earlier of the following dates. Can 1040x be filed electronically The date on which you disposed of the condemned property. Can 1040x be filed electronically The date on which the threat of condemnation began. Can 1040x be filed electronically The replacement period generally ends 2 years after the close of the first tax year in which any part of the gain on the condemnation is realized. Can 1040x be filed electronically But see Main home in disaster area , Property in the Midwestern disaster areas , Property in the Kansas disaster area , and Property in the Hurricane Katrina disaster area , earlier, for exceptions. Can 1040x be filed electronically Business or investment real property. Can 1040x be filed electronically   If real property held for use in a trade or business or for investment (not including property held primarily for sale) is condemned, the replacement period ends 3 years after the close of the first tax year in which any part of the gain on the condemnation is realized. Can 1040x be filed electronically Extension. Can 1040x be filed electronically   You can apply for an extension of the replacement period. Can 1040x be filed electronically Send your written application to the Internal Revenue Service Center where you file your tax return. Can 1040x be filed electronically See your tax return instructions for the address. Can 1040x be filed electronically Include all the details about your need for an extension. Can 1040x be filed electronically Make your application before the end of the replacement period. Can 1040x be filed electronically However, you can file an application within a reasonable time after the replacement period ends if you can show a good reason for the delay. Can 1040x be filed electronically You will get an extension of the replacement period if you can show reasonable cause for not making the replacement within the regular period. Can 1040x be filed electronically How To Postpone Gain You postpone reporting your gain by reporting your choice on your tax return for the year you have the gain. Can 1040x be filed electronically You have the gain in the year you receive insurance proceeds or other reimbursements that result in a gain. Can 1040x be filed electronically Required statement. Can 1040x be filed electronically   You should attach a statement to your return for the year you have the gain. Can 1040x be filed electronically This statement should include all the following information. Can 1040x be filed electronically The date and details of the casualty, theft, or other involuntary conversion. Can 1040x be filed electronically The insurance or other reimbursement you received. Can 1040x be filed electronically How you figured the gain. Can 1040x be filed electronically Replacement property acquired before return filed. Can 1040x be filed electronically   If you acquire replacement property before you file your return for the year you have the gain, your statement should also include detailed information about all the following items. Can 1040x be filed electronically The replacement property. Can 1040x be filed electronically The postponed gain. Can 1040x be filed electronically The basis adjustment that reflects the postponed gain. Can 1040x be filed electronically Any gain you are reporting as income. Can 1040x be filed electronically Replacement property acquired after return filed. Can 1040x be filed electronically   If you intend to buy replacement property after you file your return for the year you realize gain, your statement should also say that you are choosing to replace the property within the required replacement period. Can 1040x be filed electronically   You should then attach another statement to your return for the year in which you buy the replacement property. Can 1040x be filed electronically This statement should contain detailed information on the replacement property. Can 1040x be filed electronically If you acquire part of your replacement property in one year and part in another year, you must attach a statement to each year's return. Can 1040x be filed electronically Include in the statement detailed information on the replacement property bought in that year. Can 1040x be filed electronically Reporting weather-related sales of livestock. Can 1040x be filed electronically   If you choose to postpone reporting the gain on weather-related sales or exchanges of livestock, show all the following information on a statement attached to your return for the tax year in which you first realize any of the gain. Can 1040x be filed electronically Evidence of the weather-related conditions that forced the sale or exchange of the livestock. Can 1040x be filed electronically The gain realized on the sale or exchange. Can 1040x be filed electronically The number and kind of livestock sold or exchanged. Can 1040x be filed electronically The number of livestock of each kind you would have sold or exchanged under your usual business practice. Can 1040x be filed electronically   Show all the following information and the preceding information on the return for the year in which you replace the livestock. Can 1040x be filed electronically The dates you bought the replacement property. Can 1040x be filed electronically The cost of the replacement property. Can 1040x be filed electronically Description of the replacement property (for example, the number and kind of the replacement livestock). Can 1040x be filed electronically Amended return. Can 1040x be filed electronically   You must file an amended return (Form 1040X) for the tax year of the gain in either of the following situations. Can 1040x be filed electronically You do not acquire replacement property within the replacement period, plus extensions. Can 1040x be filed electronically On this amended return, you must report the gain and pay any additional tax due. Can 1040x be filed electronically You acquire replacement property within the required replacement period, plus extensions, but at a cost less than the amount you receive from the casualty, theft, or other involuntary conversion. Can 1040x be filed electronically On this amended return, you must report the part of the gain that cannot be postponed and pay any additional tax due. Can 1040x be filed electronically Disaster Area Losses Special rules apply to federally declared disaster area losses. Can 1040x be filed electronically A federally declared disaster is a disaster that occurred in an area declared by the President to be eligible for federal assistance under the Robert T. Can 1040x be filed electronically Stafford Disaster Relief and Emergency Assistance Act. Can 1040x be filed electronically It includes a major disaster or emergency declaration under the act. Can 1040x be filed electronically A list of the areas warranting public or individual assistance (or both) under the Act is available at the Federal Emergency Management Agency (FEMA) web site at www. Can 1040x be filed electronically fema. Can 1040x be filed electronically gov. Can 1040x be filed electronically This part discusses the special rules for when to deduct a disaster area loss and what tax deadlines may be postponed. Can 1040x be filed electronically For other special rules, see Disaster Area Losses in Publication 547. Can 1040x be filed electronically When to deduct the loss. Can 1040x be filed electronically   You generally must deduct a casualty loss in the year it occurred. Can 1040x be filed electronically However, if you have a deductible loss from a disaster that occurred in an area warranting public or individual assistance (or both), you can choose to deduct that loss on your return or amended return for the tax year immediately preceding the tax year in which the disaster happened. Can 1040x be filed electronically If you make this choice, the loss is treated as having occurred in the preceding year. Can 1040x be filed electronically    Claiming a qualifying disaster loss on the previous year's return may result in a lower tax for that year, often producing or increasing a cash refund. Can 1040x be filed electronically   You must make the choice to take your casualty loss for the disaster in the preceding year by the later of the following dates. Can 1040x be filed electronically The due date (without extensions) for filing your tax return for the tax year in which the disaster actually occurred. Can 1040x be filed electronically The due date (with extensions) for the return for the preceding tax year. Can 1040x be filed electronically Federal disaster relief grants. Can 1040x be filed electronically   Do not include post-disaster relief grants received under the Robert T. Can 1040x be filed electronically Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, or funeral expenses. Can 1040x be filed electronically Do not deduct casualty losses or medical expenses to the extent they are specifically reimbursed by these disaster relief grants. Can 1040x be filed electronically If the casualty loss was specifically reimbursed by the grant and you received the grant after the year in which you deducted the casualty loss, see Reimbursement received after deducting loss , earlier. Can 1040x be filed electronically Unemployment assistance payments under the Act are taxable unemployment compensation. Can 1040x be filed electronically Qualified disaster relief payments. Can 1040x be filed electronically   Qualified disaster relief payments are not included in the income of individuals to the extent any expenses compensated by these payments are not otherwise compensated for by insurance or other reimbursement. Can 1040x be filed electronically These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). Can 1040x be filed electronically No withholding applies to these payments. Can 1040x be filed electronically   Qualified disaster relief payments include payments you receive (regardless of the source) for the following expenses. Can 1040x be filed electronically Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a federally declared disaster. Can 1040x be filed electronically Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a federally declared disaster. Can 1040x be filed electronically (A personal residence can be a rented residence or one you own. Can 1040x be filed electronically ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a federally declared disaster. Can 1040x be filed electronically   Qualified disaster relief payments include amounts paid by a federal, state, or local government in connection with a federally declared disaster to individuals affected by the disaster. Can 1040x be filed electronically    Qualified disaster relief payments do not include: Payments for expenses otherwise paid for by insurance or other reimbursements, or Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation. Can 1040x be filed electronically Qualified disaster mitigation payments. Can 1040x be filed electronically   Qualified disaster mitigation payments made under the Robert T. Can 1040x be filed electronically Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) are not included in income. Can 1040x be filed electronically These are payments you, as a property owner, receive to reduce the risk of future damage to your property. Can 1040x be filed electronically You cannot increase your basis in property, or take a deduction or credit, for expenditures made with respect to those payments. Can 1040x be filed electronically Sale of property under hazard mitigation program. Can 1040x be filed electronically   Generally, if you sell or otherwise transfer property, you must recognize any gain or loss for tax purposes unless the property is your main home. Can 1040x be filed electronically You report the gain or deduct the loss on your tax return for the year you realize it. Can 1040x be filed electronically (You cannot deduct a loss on personal-use property unless the loss resulted from a casualty, as discussed earlier. Can 1040x be filed electronically ) However, if you sell or otherwise transfer property to the Federal Government, a state or local government, or an Indian tribal government under a hazard mitigation program, you can choose to postpone reporting the gain if you buy qualifying replacement property within a certain period of time. Can 1040x be filed electronically See Postponing Gain , earlier, for the rules that apply. Can 1040x be filed electronically Other federal assistance programs. Can 1040x be filed electronically    For more information about other federal assistance programs, see Crop Insurance and Crop Disaster Payments and Feed Assistance and Payments in chapter 3 earlier. Can 1040x be filed electronically Postponed tax deadlines. Can 1040x be filed electronically   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. Can 1040x be filed electronically The tax deadlines the IRS may postpone include those for filing income, excise, and employment tax returns, paying income, excise, and employment taxes, and making contributions to a traditional IRA or Roth IRA. Can 1040x be filed electronically   If any tax deadline is postponed, the IRS will publicize the postponement in your area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). Can 1040x be filed electronically Go to http://www. Can 1040x be filed electronically irs. Can 1040x be filed electronically gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. Can 1040x be filed electronically Who is eligible. Can 1040x be filed electronically   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Can 1040x be filed electronically Any individual whose main home is located in a covered disaster area (defined next). Can 1040x be filed electronically Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Can 1040x be filed electronically Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered disaster area. Can 1040x be filed electronically Any individual, business entity, or sole proprietorship whose records are needed to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. Can 1040x be filed electronically The main home or principal place of business does not have to be located in the covered disaster area. Can 1040x be filed electronically Any estate or trust that has tax records necessary to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. Can 1040x be filed electronically The spouse on a joint return with a taxpayer who is eligible for postponements. Can 1040x be filed electronically Any individual, business entity, or sole proprietorship not located in a covered disaster area, but whose necessary records to meet a postponed tax deadline are located in the covered disaster area. Can 1040x be filed electronically Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. Can 1040x be filed electronically Any other person determined by the IRS to be affected by a federally declared disaster. Can 1040x be filed electronically Covered disaster area. Can 1040x be filed electronically   This is an area of a federally declared disaster area in which the IRS has decided to postpone tax deadlines for up to 1 year. Can 1040x be filed electronically Abatement of interest and penalties. Can 1040x be filed electronically   The IRS may abate the interest and penalties on the underpaid income tax for the length of any postponement of tax deadlines. Can 1040x be filed electronically Reporting Gains and Losses You will have to file one or more of the following forms to report your gains or losses from involuntary conversions. Can 1040x be filed electronically Form 4684. Can 1040x be filed electronically   Use this form to report your gains and losses from casualties and thefts. Can 1040x be filed electronically Form 4797. Can 1040x be filed electronically   Use this form to report involuntary conversions (other than from casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business or a transaction entered into for profit. Can 1040x be filed electronically Also use this form if you have a gain from a casualty or theft on trade, business or income-producing property held for more than 1 year and you have to recapture some or all of your gain as ordinary income. Can 1040x be filed electronically Form 8949. Can 1040x be filed electronically   Use this form to report gain from an involuntary conversion (other than from casualty or theft) of personal-use property. Can 1040x be filed electronically Schedule A (Form 1040). Can 1040x be filed electronically   Use this form to deduct your losses from casualties and thefts of personal-use property and income-producing property, that you reported on Form 4684. Can 1040x be filed electronically Schedule D (Form 1040). Can 1040x be filed electronically   Use this form to carry over the following gains. Can 1040x be filed electronically Net gain shown on Form 4797 from an involuntary conversion of business property held for more than 1 year. Can 1040x be filed electronically Net gain shown on Form 4684 from the casualty or theft of personal-use property. Can 1040x be filed electronically    Also use this form to figure the overall gain or loss from transactions reported on Form 8949. Can 1040x be filed electronically Schedule F (Form 1040). Can 1040x be filed electronically   Use this form to deduct your losses from casualty or theft of livestock or produce bought for sale under Other expenses in Part II, line 32, if you use the cash method of accounting and have not otherwise deducted these losses. Can 1040x be filed electronically Prev  Up  Next   Home   More Online Publications