Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

File A Tax Amendment Online

How To File Taxes OnlineStudent IncomeMilitary Tax HelpStudent Filing Taxes 2013Tax Software For 2011Irs Gov FormsTaxact 1040x1040nr Ez 2012MyfreetaxesHow Do I Amend My 2012 Federal Tax ReturnInstructions On How To Fill Out 1040ezCan I File My 2012 TaxesIrs Tax Return1040 Ez Online1040 Ez File OnlineFree Tax HelpE-file State Taxes FreeWww Irs Gov Efile Index HtmlAmended Michigan Tax ReturnFiling Form 1040x1040ezIrsform1040x1040ez FreeHow To File Taxes On UnemploymentForm 1040Tax Filing For 20122012 1040a Tax FormH&r Block Free State Tax FilingState Income Tax ReturnCheap State Tax Filing2012 Form 1040ezTax Preparation OnlineTax PreparationWwwh&rblock ComFree Income Tax PreparationState Tax File For FreeIrs Gov ComOnline 1040ez FilingTurbotax Deluxe Federal E File State 2011 Old Version1040x Amendment

File A Tax Amendment Online

File a tax amendment online Publication 519 - Introductory Material Table of Contents Future Developments IntroductionOrdering forms and publications. File a tax amendment online Tax questions. File a tax amendment online What's New Reminders Future Developments For the latest information about developments related to Publication 519, such as legislation enacted after it was published, go to www. File a tax amendment online irs. File a tax amendment online gov/pub519. File a tax amendment online Introduction For tax purposes, an alien is an individual who is not a U. File a tax amendment online S. File a tax amendment online citizen. File a tax amendment online Aliens are classified as nonresident aliens and resident aliens. File a tax amendment online This publication will help you determine your status and give you information you will need to file your U. File a tax amendment online S. File a tax amendment online tax return. File a tax amendment online Resident aliens generally are taxed on their worldwide income, the same as U. File a tax amendment online S. File a tax amendment online citizens. File a tax amendment online Nonresident aliens are taxed only on their income from sources within the United States and on certain income connected with the conduct of a trade or business in the United States. File a tax amendment online The information in this publication is not as comprehensive for resident aliens as it is for nonresident aliens. File a tax amendment online Resident aliens are generally treated the same as U. File a tax amendment online S. File a tax amendment online citizens and can find more information in other IRS publications. File a tax amendment online Table A, Where To Find What You Need To Know About U. File a tax amendment online S. File a tax amendment online Taxes, provides a list of questions and the chapter or chapters in this publication where you will find the related discussion. File a tax amendment online Answers to frequently asked questions are presented in the back of the publication. File a tax amendment online Table A. File a tax amendment online Where To Find What You Need To Know About U. File a tax amendment online S. File a tax amendment online Taxes Commonly Asked Questions Where To Find The Answer Am I a nonresident alien or resident alien? See chapter 1. File a tax amendment online Can I be a nonresident alien and a resident alien in the same year? See Dual-Status Aliens in chapter 1. File a tax amendment online See chapter 6. File a tax amendment online I am a resident alien and my spouse is a nonresident alien. File a tax amendment online Are there special rules for us? See Nonresident Spouse Treated as a Resident  in chapter 1. File a tax amendment online See Community Income in chapter 2. File a tax amendment online Is all my income subject to U. File a tax amendment online S. File a tax amendment online tax? See chapter 2. File a tax amendment online See chapter 3. File a tax amendment online Is my scholarship subject to U. File a tax amendment online S. File a tax amendment online tax? See Scholarship Grants, Prizes, and Awards in chapter 2. File a tax amendment online See Scholarship and Fellowship Grants in chapter 3. File a tax amendment online See chapter 9. File a tax amendment online What is the tax rate on my income subject to U. File a tax amendment online S. File a tax amendment online tax? See chapter 4. File a tax amendment online I moved to the United States this year. File a tax amendment online Can I deduct my moving expenses on my U. File a tax amendment online S. File a tax amendment online return? See Deductions in chapter 5. File a tax amendment online Can I claim exemptions for my spouse and children? See Exemptions in chapter 5. File a tax amendment online I pay income taxes to my home country. File a tax amendment online Can I get credit for these taxes on my U. File a tax amendment online S. File a tax amendment online tax return? See Tax Credits and Payments in chapter 5. File a tax amendment online What forms must I file and when and where do I file them? See chapter 7. File a tax amendment online How should I pay my U. File a tax amendment online S. File a tax amendment online income taxes? See chapter 8. File a tax amendment online Am I eligible for any benefits under a tax treaty? See Income Entitled to Tax Treaty Benefits in chapter 8. File a tax amendment online See chapter 9. File a tax amendment online Are employees of foreign governments and international organizations exempt from U. File a tax amendment online S. File a tax amendment online tax? See chapter 10. File a tax amendment online Is there anything special I have to do before leaving the United States? See chapter 11. File a tax amendment online See Expatriation Tax in chapter 4. File a tax amendment online Comments and suggestions. File a tax amendment online   We welcome your comments about this publication and your suggestions for future editions. File a tax amendment online   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. File a tax amendment online NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. File a tax amendment online Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. File a tax amendment online   You can send us comments from www. File a tax amendment online irs. File a tax amendment online gov/formspubs/. File a tax amendment online Click on “More Information” and then on “Comment on Tax Forms and Publications. File a tax amendment online ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. File a tax amendment online Ordering forms and publications. File a tax amendment online   Visit www. File a tax amendment online irs. File a tax amendment online gov/formspubs/ to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received. File a tax amendment online Internal Revenue Service 1201 N. File a tax amendment online Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. File a tax amendment online   If you have a tax question, check the information available on IRS. File a tax amendment online gov or call 1-800-829-1040. File a tax amendment online We cannot answer tax questions sent to either of the above addresses. File a tax amendment online What's New Personal exemption increased. File a tax amendment online  For tax years beginning in 2013, the personal exemption amount is increased to $3,900. File a tax amendment online U. File a tax amendment online S. File a tax amendment online real property interest. File a tax amendment online  Generally, the treatment of a regulated investment company (RIC) as a qualified investment entity (QIE) was scheduled to expire at the end of 2011. File a tax amendment online The provision has been extended through 2013. File a tax amendment online The special rules that apply to distributions from a QIE attributable to the gain from the sale or exchange of a U. File a tax amendment online S. File a tax amendment online real property interest will continue to apply to any distribution from a RIC in 2013. File a tax amendment online Beginning in 2014 (unless extended by legislation), a RIC will only be treated as a QIE for certain distributions from the RIC that are directly or indirectly attributable to distributions received by the RIC from a REIT. File a tax amendment online See Qualified investment entities under U. File a tax amendment online S. File a tax amendment online Real Property Interest. File a tax amendment online Interest-related dividends and short-term capital gain dividends received from mutual funds. File a tax amendment online  The exemption of tax on certain interest-related dividends and short-term capital gain dividends paid by a mutual fund or other regulated investment company was scheduled to expire at the end of 2011. File a tax amendment online These provisions have been extended through 2013. File a tax amendment online The exemption expires for amounts paid in tax years beginning after December 31, 2013 (unless extended by legislation). File a tax amendment online Multi-level marketing. File a tax amendment online  Clarification regarding the characterization and source of income received from multi-level marketing companies by distributors (upper-tier distributors) that are based on the sales or purchases of persons whom they have recruited and sponsored (lower-tier distributors) is provided. File a tax amendment online See Multi-level marketing under Personal Services in chapter 2. File a tax amendment online Additional Medicare Tax. File a tax amendment online  For 2013, you may be required to pay Additional Medicare Tax. File a tax amendment online Also, you may need to report Additional Medicare Tax withheld by your employer. File a tax amendment online For more information, see Additional Medicare Tax under Social Security and Medicare Taxes and Self-Employment Tax in chapter 8. File a tax amendment online For more information on Additional Medicare Tax, go to IRS. File a tax amendment online gov and enter “Additional Medicare Tax” in the search box. File a tax amendment online Reminders Refunds of certain withholding tax delayed. File a tax amendment online  Refund requests for tax withheld and reported on Form 1042-S, Form 8288-A, or Form 8805 may require additional time for processing. File a tax amendment online Allow up to 6 months for these refunds to be issued. File a tax amendment online Third party designee. File a tax amendment online  You can check the “Yes” box in the “Third Party Designee” area of your return to authorize the IRS to discuss your return with a friend, family member, or any other person you choose. File a tax amendment online This allows the IRS to call the person you identified as your designee to answer any questions that may arise during the processing of your return. File a tax amendment online It also allows your designee to perform certain actions such as asking the IRS for copies of notices or transcripts related to your return. File a tax amendment online Also, the authorization can be revoked. File a tax amendment online See your income tax return instructions for details. File a tax amendment online Change of address. File a tax amendment online . File a tax amendment online  If you change your mailing address, be sure to notify the Internal Revenue Service using Form 8822, Change of Address. File a tax amendment online Photographs of missing children. File a tax amendment online  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. File a tax amendment online Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. File a tax amendment online You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. File a tax amendment online Prev  Up  Next   Home   More Online Publications
Español

The File A Tax Amendment Online

File a tax amendment online Publication 547 - Main Content Table of Contents CasualtyFamily pet. File a tax amendment online Progressive deterioration. File a tax amendment online Special Procedure for Damage From Corrosive Drywall Theft Loss on Deposits Proof of Loss Figuring a LossGain from reimbursement. File a tax amendment online Business or income-producing property. File a tax amendment online Loss of inventory. File a tax amendment online Leased property. File a tax amendment online Exception for personal-use real property. File a tax amendment online Decrease in Fair Market Value Adjusted Basis Insurance and Other Reimbursements Deduction Limits2% Rule $100 Rule 10% Rule Figuring the Deduction Figuring a GainPostponement of Gain When To Report Gains and LossesLoss on deposits. File a tax amendment online Lessee's loss. File a tax amendment online Disaster Area LossesDisaster loss to inventory. File a tax amendment online Main home in disaster area. File a tax amendment online Unsafe home. File a tax amendment online Time limit for making choice. File a tax amendment online Revoking your choice. File a tax amendment online Figuring the loss deduction. File a tax amendment online How to report the loss on Form 1040X. File a tax amendment online Records. File a tax amendment online Need a copy of your tax return for the preceding year? Postponed Tax Deadlines Contacting the Federal Emergency Management Agency (FEMA) How To Report Gains and LossesProperty held 1 year or less. File a tax amendment online Property held more than 1 year. File a tax amendment online Depreciable property. File a tax amendment online Adjustments to Basis If Deductions Are More Than Income How To Get Tax HelpLow Income Taxpayer Clinics Casualty A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. File a tax amendment online A sudden event is one that is swift, not gradual or progressive. File a tax amendment online An unexpected event is one that is ordinarily unanticipated and unintended. File a tax amendment online 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. File a tax amendment online Generally, casualty losses are deductible during the taxable year that the loss occurred. File a tax amendment online See Table 3, later. File a tax amendment online Deductible losses. File a tax amendment online   Deductible casualty losses can result from a number of different causes, including the following. File a tax amendment online Car accidents (but see Nondeductible losses , next, for exceptions). File a tax amendment online Earthquakes. File a tax amendment online Fires (but see Nondeductible losses , next, for exceptions). File a tax amendment online Floods. File a tax amendment online Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster as discussed under Disaster Area Losses , later. File a tax amendment online Mine cave-ins. File a tax amendment online Shipwrecks. File a tax amendment online Sonic booms. File a tax amendment online Storms, including hurricanes and tornadoes. File a tax amendment online Terrorist attacks. File a tax amendment online Vandalism. File a tax amendment online Volcanic eruptions. File a tax amendment online Nondeductible losses. File a tax amendment online   A casualty loss is not deductible if the damage or destruction is caused by the following. File a tax amendment online Accidentally breaking articles such as glassware or china under normal conditions. File a tax amendment online A family pet (explained below). File a tax amendment online A fire if you willfully set it, or pay someone else to set it. File a tax amendment online A car accident if your willful negligence or willful act caused it. File a tax amendment online The same is true if the willful act or willful negligence of someone acting for you caused the accident. File a tax amendment online Progressive deterioration (explained below). File a tax amendment online However, see Special Procedure for Damage From Corrosive Drywall , later. File a tax amendment online Family pet. File a tax amendment online   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed earlier under Casualty are met. File a tax amendment online Example. File a tax amendment online Your antique oriental rug was damaged by your new puppy before it was housebroken. File a tax amendment online Because the damage was not unexpected and unusual, the loss is not deductible as a casualty loss. File a tax amendment online Progressive deterioration. File a tax amendment online   Loss of property due to progressive deterioration is not deductible as a casualty loss. File a tax amendment online This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. File a tax amendment online The following are examples of damage due to progressive deterioration. File a tax amendment online The steady weakening of a building due to normal wind and weather conditions. File a tax amendment online The deterioration and damage to a water heater that bursts. File a tax amendment online However, the rust and water damage to rugs and drapes caused by the bursting of a water heater does qualify as a casualty. File a tax amendment online Most losses of property caused by droughts. File a tax amendment online To be deductible, a drought-related loss generally must be incurred in a trade or business or in a transaction entered into for profit. File a tax amendment online Termite or moth damage. File a tax amendment online The damage or destruction of trees, shrubs, or other plants by a fungus, disease, insects, worms, or similar pests. File a tax amendment online However, a sudden destruction due to an unexpected or unusual infestation of beetles or other insects may result in a casualty loss. File a tax amendment online Special Procedure for Damage From Corrosive Drywall Under a special procedure, you can deduct the amounts you paid to repair damage to your home and household appliances due to corrosive drywall. File a tax amendment online Under this procedure, you treat the amounts paid for repairs as a casualty loss in the year of payment. File a tax amendment online For example, amounts you paid for repairs in 2013 are deductible on your 2013 tax return and amounts you paid for repairs in 2012 are deductible on your 2012 tax return. File a tax amendment online Note. File a tax amendment online If you paid for any repairs before 2013 and you choose to follow this special procedure, you can amend your return for the earlier year by filing Form 1040X, Amended U. File a tax amendment online S. File a tax amendment online Individual Income Tax Return, and attaching a completed Form 4684 for the appropriate year. File a tax amendment online Form 4684 for the appropriate year can be found at IRS. File a tax amendment online gov. File a tax amendment online Generally, Form 1040X must be filed within 3 years after the date the original return was filed or within 2 years after the date the tax was paid, whichever is later. File a tax amendment online Corrosive drywall. File a tax amendment online   For purposes of this special procedure, “corrosive drywall” means drywall that is identified as problem drywall under the two-step identification method published by the Consumer Product Safety Commission (CPSC) and the Department of Housing and Urban Development (HUD) in their interim guidance dated January 28, 2010, as revised by the CPSC and HUD. File a tax amendment online The revised identification guidance and remediation guidelines are available at www. File a tax amendment online cpsc. File a tax amendment online gov/Safety-Education/Safety-Education-Centers/Drywall. File a tax amendment online Special instructions for completing Form 4684. File a tax amendment online   If you choose to follow this special procedure, complete Form 4684, Section A, according to the instructions below. File a tax amendment online The IRS will not challenge your treatment of damage resulting from corrosive drywall as a casualty loss if you determine and report the loss as explained below. File a tax amendment online Top margin of Form 4684. File a tax amendment online   Enter “Revenue Procedure 2010-36”. File a tax amendment online Line 1. File a tax amendment online   Enter the information required by the line 1 instructions. File a tax amendment online Line 2. File a tax amendment online   Skip this line. File a tax amendment online Line 3. File a tax amendment online   Enter the amount of insurance or other reimbursements you received (including through litigation). File a tax amendment online If none, enter -0-. File a tax amendment online Lines 4–7. File a tax amendment online   Skip these lines. File a tax amendment online Line 8. File a tax amendment online   Enter the amount you paid to repair the damage to your home and household appliances due to corrosive drywall. File a tax amendment online Enter only the amounts you paid to restore your home to the condition existing immediately before the damage. File a tax amendment online Do not enter any amounts you paid for improvements or additions that increased the value of your home above its pre-loss value. File a tax amendment online If you replaced a household appliance instead of repairing it, enter the lesser of: The current cost to replace the original appliance, or The basis of the original appliance (generally its cost). File a tax amendment online Line 9. File a tax amendment online   If line 8 is more than line 3, do one of the following. File a tax amendment online If you have a pending claim for reimbursement (or you intend to pursue reimbursement), enter 75% of the difference between lines 3 and 8. File a tax amendment online If item (1) does not apply to you, enter the full amount of the difference between lines 3 and 8. File a tax amendment online If line 8 is less than or equal to line 3, you cannot claim a casualty loss deduction using this special procedure. File a tax amendment online    If you have a pending claim for reimbursement (or you intend to pursue reimbursement), you may have income or an additional deduction in a later tax year depending on the actual amount of reimbursement received. File a tax amendment online See Reimbursement Received After Deducting Loss, later. File a tax amendment online Lines 10–18. File a tax amendment online   Complete these lines according to the Instructions for Form 4684. File a tax amendment online Choosing not to follow this special procedure. File a tax amendment online   If you choose not to follow this special procedure, you are subject to all of the provisions that apply to the deductibility of casualty losses, and you must complete lines 1–9 according to the Instructions for Form 4684. File a tax amendment online This means, for example, that you must establish that the damage, destruction, or loss of property resulted from an identifiable event as defined earlier under Casualty . File a tax amendment online Furthermore, you must have proof that shows the following. File a tax amendment online The loss is properly deductible in the tax year you claimed it and not in some other year. File a tax amendment online See When To Report Gains and Losses , later. File a tax amendment online The amount of the claimed loss. File a tax amendment online See Proof of Loss , later. File a tax amendment online No claim for reimbursement of any portion of the loss exists for which there is a reasonable prospect of recovery. File a tax amendment online See When To Report Gains and Losses , later. File a tax amendment online Theft A theft is the taking and removing of money or property with the intent to deprive the owner of it. File a tax amendment online 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. File a tax amendment online You do not need to show a conviction for theft. File a tax amendment online Theft includes the taking of money or property by the following means. File a tax amendment online Blackmail. File a tax amendment online Burglary. File a tax amendment online Embezzlement. File a tax amendment online Extortion. File a tax amendment online Kidnapping for ransom. File a tax amendment online Larceny. File a tax amendment online Robbery. File a tax amendment online The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. File a tax amendment online Decline in market value of stock. File a tax amendment online   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. File a tax amendment online 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. File a tax amendment online You report a capital loss on Schedule D (Form 1040). File a tax amendment online For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. File a tax amendment online Mislaid or lost property. File a tax amendment online    The simple disappearance of money or property is not a theft. File a tax amendment online 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. File a tax amendment online Sudden, unexpected, and unusual events were defined earlier under Casualty . File a tax amendment online Example. File a tax amendment online A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. File a tax amendment online The diamond falls from the ring and is never found. File a tax amendment online The loss of the diamond is a casualty. File a tax amendment online Losses from Ponzi-type investment schemes. File a tax amendment online   The IRS has issued the following guidance to assist taxpayers who are victims of losses from Ponzi-type investment schemes: Revenue Ruling 2009-9, 2009-14 I. File a tax amendment online R. File a tax amendment online B. File a tax amendment online 735 (available at www. File a tax amendment online irs. File a tax amendment online gov/irb/2009-14_IRB/ar07. File a tax amendment online html). File a tax amendment online Revenue Procedure 2009-20, 2009-14 I. File a tax amendment online R. File a tax amendment online B. File a tax amendment online 749 (available at www. File a tax amendment online irs. File a tax amendment online gov/irb/2009-14_IRB/ar11. File a tax amendment online html). File a tax amendment online Revenue Procedure 2011-58, 2011-50 I. File a tax amendment online R. File a tax amendment online B. File a tax amendment online 847 (available at www. File a tax amendment online irs. File a tax amendment online gov/irb/2011-50_IRB/ar11. File a tax amendment online html). File a tax amendment online If you qualify to use Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58, and you choose to follow the procedures in the guidance, first fill out Section C of Form 4684 to determine the amount to enter on Section B, line 28. File a tax amendment online Skip lines 19 to 27, but you must fill out Section B, lines 29 to 39, as appropriate. File a tax amendment online Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. File a tax amendment online You do not need to complete Appendix A. File a tax amendment online For more information, see the above revenue ruling and revenue procedures, and the Instructions for Form 4684. File a tax amendment online   If you choose not to use the procedures in Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58, you may claim your theft loss by filling out Section B, lines 19 to 39, as appropriate. File a tax amendment online Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. File a tax amendment online If you incurred this type of loss, you can choose one of the following ways to deduct the loss. File a tax amendment online As a casualty loss. File a tax amendment online As an ordinary loss. File a tax amendment online As a nonbusiness bad debt. File a tax amendment online Casualty loss or ordinary loss. File a tax amendment online   You can choose to deduct a loss on deposits as a casualty loss or as an ordinary loss for any year in which you can reasonably estimate how much of your deposits you have lost in an insolvent or bankrupt financial institution. File a tax amendment online The choice generally is made on the return you file for that year and applies to all your losses on deposits for the year in that particular financial institution. File a tax amendment online If you treat the loss as a casualty or ordinary loss, you cannot treat the same amount of the loss as a nonbusiness bad debt when it actually becomes worthless. File a tax amendment online However, you can take a nonbusiness bad debt deduction for any amount of loss that is more than the estimated amount you deducted as a casualty or ordinary loss. File a tax amendment online Once you make the choice, you cannot change it without permission from the Internal Revenue Service. File a tax amendment online   If you claim an ordinary loss, report it as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. File a tax amendment online The maximum amount you can claim is $20,000 ($10,000 if you are married filing separately) reduced by any expected state insurance proceeds. File a tax amendment online Your loss is subject to the 2%-of-adjusted-gross-income limit. File a tax amendment online You cannot choose to claim an ordinary loss if any part of the deposit is federally insured. File a tax amendment online Nonbusiness bad debt. File a tax amendment online   If you do not choose to deduct the loss as a casualty loss or as an ordinary loss, you must wait until the year the actual loss is determined and deduct the loss as a nonbusiness bad debt in that year. File a tax amendment online How to report. File a tax amendment online   The kind of deduction you choose for your loss on deposits determines how you report your loss. File a tax amendment online See Table 1. File a tax amendment online More information. File a tax amendment online   For more information, see Special Treatment for Losses on Deposits in Insolvent or Bankrupt Financial Institutions in the Instructions for Form 4684. File a tax amendment online Deducted loss recovered. File a tax amendment online   If you recover an amount you deducted as a loss in an earlier year, you may have to include the amount recovered in your income for the year of recovery. File a tax amendment online If any part of the original deduction did not reduce your tax in the earlier year, you do not have to include that part of the recovery in your income. File a tax amendment online For more information, see Recoveries in Publication 525. File a tax amendment online Proof of Loss To deduct a casualty or theft loss, you must be able to show that there was a casualty or theft. File a tax amendment online You also must be able to support the amount you take as a deduction. File a tax amendment online Casualty loss proof. File a tax amendment online   For a casualty loss, you should be able to show all of the following. File a tax amendment online The type of casualty (car accident, fire, storm, etc. File a tax amendment online ) and when it occurred. File a tax amendment online That the loss was a direct result of the casualty. File a tax amendment online 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. File a tax amendment online Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. File a tax amendment online Theft loss proof. File a tax amendment online   For a theft loss, you should be able to show all of the following. File a tax amendment online When you discovered that your property was missing. File a tax amendment online That your property was stolen. File a tax amendment online That you were the owner of the property. File a tax amendment online Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. File a tax amendment online    It is important that you have records that will prove your deduction. File a tax amendment online If you do not have the actual records to support your deduction, you can use other satisfactory evidence to support it. File a tax amendment online Figuring a Loss To determine your deduction for a casualty or theft loss, you must first figure your loss. File a tax amendment online Table 1. File a tax amendment online Reporting Loss on Deposits IF you choose to report the loss as a(n). File a tax amendment online . File a tax amendment online . File a tax amendment online   THEN report it on. File a tax amendment online . File a tax amendment online . File a tax amendment online casualty loss   Form 4684 and Schedule A  (Form 1040). File a tax amendment online ordinary loss   Schedule A (Form 1040). File a tax amendment online nonbusiness bad debt   Form 8949 and Schedule D (Form 1040). File a tax amendment online Amount of loss. File a tax amendment online   Figure the amount of your loss using the following steps. File a tax amendment online Determine your adjusted basis in the property before the casualty or theft. File a tax amendment online Determine the decrease in fair market value (FMV) of the property as a result of the casualty or theft. File a tax amendment online From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you received or expect to receive. File a tax amendment online For personal-use property and property used in performing services as an employee, apply the deduction limits, discussed later, to determine the amount of your deductible loss. File a tax amendment online Gain from reimbursement. File a tax amendment online   If your reimbursement is more than your adjusted basis in the property, you have a gain. File a tax amendment online This is true even if the decrease in the FMV of the property is smaller than your adjusted basis. File a tax amendment online If you have a gain, you may have to pay tax on it, or you may be able to postpone reporting the gain. File a tax amendment online See Figuring a Gain , later. File a tax amendment online Business or income-producing property. File a tax amendment online   If you have business or income-producing property, such as rental property, and it is stolen or completely destroyed, the decrease in FMV is not considered. File a tax amendment online 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   Loss of inventory. File a tax amendment online   There are two ways you can deduct a casualty or theft loss of inventory, including items you hold for sale to customers. File a tax amendment online   One way is to deduct the loss through the increase in the cost of goods sold by properly reporting your opening and closing inventories. File a tax amendment online Do not claim this loss again as a casualty or theft loss. File a tax amendment online If you take the loss through the increase in the cost of goods sold, include any insurance or other reimbursement you receive for the loss in gross income. File a tax amendment online   The other way is to deduct the loss separately. File a tax amendment online If you deduct it separately, eliminate the affected inventory items from the cost of goods sold by making a downward adjustment to opening inventory or purchases. File a tax amendment online Reduce the loss by the reimbursement you received. File a tax amendment online Do not include the reimbursement in gross income. File a tax amendment online If you do not receive the reimbursement by the end of the year, you may not claim a loss to the extent you have a reasonable prospect of recovery. File a tax amendment online Leased property. File a tax amendment online   If you are liable for casualty damage to property you lease, your loss is the amount you must pay to repair the property minus any insurance or other reimbursement you receive or expect to receive. File a tax amendment online Separate computations. File a tax amendment online   Generally, if a single casualty or theft involves more than one item of property, you must figure the loss on each item separately. File a tax amendment online Then combine the losses to determine the total loss from that casualty or theft. File a tax amendment online Exception for personal-use real property. File a tax amendment online   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. File a tax amendment online Figure the loss using the smaller of the following. File a tax amendment online The decrease in FMV of the entire property. File a tax amendment online The adjusted basis of the entire property. File a tax amendment online   See Real property under Figuring the Deduction, later. File a tax amendment online Decrease in Fair Market Value Fair market value (FMV) is the price for which you could sell your property to a willing buyer when neither of you has to sell or buy and both of you know all the relevant facts. File a tax amendment online The decrease in FMV used to figure the amount of a casualty or theft loss is the difference between the property's fair market value immediately before and immediately after the casualty or theft. File a tax amendment online FMV of stolen property. File a tax amendment online   The FMV of property immediately after a theft is considered to be zero because you no longer have the property. File a tax amendment online Example. File a tax amendment online Several years ago, you purchased silver dollars at face value for $150. File a tax amendment online This is your adjusted basis in the property. File a tax amendment online Your silver dollars were stolen this year. File a tax amendment online The FMV of the coins was $1,000 just before they were stolen, and insurance did not cover them. File a tax amendment online Your theft loss is $150. File a tax amendment online Recovered stolen property. File a tax amendment online   Recovered stolen property is your property that was stolen and later returned to you. File a tax amendment online If you recovered property after you had already taken a theft loss deduction, you must refigure your loss using the smaller of the property's adjusted basis (explained later) or the decrease in FMV from the time just before it was stolen until the time it was recovered. File a tax amendment online Use this amount to refigure your total loss for the year in which the loss was deducted. File a tax amendment online   If your refigured loss is less than the loss you deducted, you generally have to report the difference as income in the recovery year. File a tax amendment online But report the difference only up to the amount of the loss that reduced your tax. File a tax amendment online For more information on the amount to report, see Recoveries in Publication 525. File a tax amendment online Figuring Decrease in FMV — Items To Consider To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. File a tax amendment online However, other measures also can be used to establish certain decreases. File a tax amendment online See Appraisal and Cost of cleaning up or making repairs , next. File a tax amendment online Appraisal. File a tax amendment online   An appraisal to determine the difference between the FMV of the property immediately before a casualty or theft and immediately afterwards should be made by a competent appraiser. File a tax amendment online The appraiser must recognize the effects of any general market decline that may occur along with the casualty. File a tax amendment online This information is needed to limit any deduction to the actual loss resulting from damage to the property. File a tax amendment online   Several factors are important in evaluating the accuracy of an appraisal, including the following. File a tax amendment online The appraiser's familiarity with your property before and after the casualty or theft. File a tax amendment online The appraiser's knowledge of sales of comparable property in the area. File a tax amendment online The appraiser's knowledge of conditions in the area of the casualty. File a tax amendment online The appraiser's method of appraisal. File a tax amendment online You may be able to use an appraisal that you used to get a federal loan (or a federal loan guarantee) as the result of a federally declared disaster to establish the amount of your disaster loss. File a tax amendment online For more information on disasters, see Disaster Area Losses, later. File a tax amendment online Cost of cleaning up or making repairs. File a tax amendment online   The cost of repairing damaged property is not part of a casualty loss. File a tax amendment online Neither is the cost of cleaning up after a casualty. File a tax amendment online But you can use the cost of cleaning up or of making repairs after a casualty as a measure of the decrease in FMV if you meet all the following conditions. File a tax amendment online The repairs are actually made. File a tax amendment online The repairs are necessary to bring the property back to its condition before the casualty. File a tax amendment online The amount spent for repairs is not excessive. File a tax amendment online The repairs take care of the damage only. File a tax amendment online The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. File a tax amendment online Landscaping. File a tax amendment online   The cost of restoring landscaping to its original condition after a casualty may indicate the decrease in FMV. File a tax amendment online You may be able to measure your loss by what you spend on the following. File a tax amendment online Removing destroyed or damaged trees and shrubs, minus any salvage you receive. File a tax amendment online Pruning and other measures taken to preserve damaged trees and shrubs. File a tax amendment online Replanting necessary to restore the property to its approximate value before the casualty. File a tax amendment online Car value. File a tax amendment online   Books issued by various automobile organizations that list your car may be useful in figuring the value of your car. File a tax amendment online You can use the books' retail values and modify them by factors such as the mileage and condition of your car to figure its value. File a tax amendment online The prices are not official, but they may be useful in determining value and suggesting relative prices for comparison with current sales and offerings in your area. File a tax amendment online If your car is not listed in the books, determine its value from other sources. File a tax amendment online A dealer's offer for your car as a trade-in on a new car is not usually a measure of its true value. File a tax amendment online Figuring Decrease in FMV — Items Not To Consider You generally should not consider the following items when attempting to establish the decrease in FMV of your property. File a tax amendment online Cost of protection. File a tax amendment online   The cost of protecting your property against a casualty or theft is not part of a casualty or theft loss. File a tax amendment online The amount you spend on insurance or to board up your house against a storm is not part of your loss. File a tax amendment online If the property is business property, these expenses are deductible as business expenses. File a tax amendment online   If you make permanent improvements to your property to protect it against a casualty or theft, add the cost of these improvements to your basis in the property. File a tax amendment online An example would be the cost of a dike to prevent flooding. File a tax amendment online Exception. File a tax amendment online   You cannot increase your basis in the property by, or deduct as a business expense, any expenditures you made with respect to qualified disaster mitigation payments (discussed later under Disaster Area Losses ). File a tax amendment online Related expenses. File a tax amendment online   The incidental expenses due to a casualty or theft, such as expenses for the treatment of personal injuries, for temporary housing, or for a rental car, are not part of your casualty or theft loss. File a tax amendment online However, they may be deductible as business expenses if the damaged or stolen property is business property. File a tax amendment online Replacement cost. File a tax amendment online   The cost of replacing stolen or destroyed property is not part of a casualty or theft loss. File a tax amendment online Example. File a tax amendment online You bought a new chair 4 years ago for $300. File a tax amendment online In April, a fire destroyed the chair. File a tax amendment online You estimate that it would cost $500 to replace it. File a tax amendment online If you had sold the chair before the fire, you estimate that you could have received only $100 for it because it was 4 years old. File a tax amendment online The chair was not insured. File a tax amendment online Your loss is $100, the FMV of the chair before the fire. File a tax amendment online It is not $500, the replacement cost. File a tax amendment online Sentimental value. File a tax amendment online   Do not consider sentimental value when determining your loss. File a tax amendment online If a family portrait, heirloom, or keepsake is damaged, destroyed, or stolen, you must base your loss on its FMV, as limited by your adjusted basis in the property. File a tax amendment online Decline in market value of property in or near casualty area. File a tax amendment online   A decrease in the value of your property because it is in or near an area that suffered a casualty, or that might again suffer a casualty, is not to be taken into consideration. File a tax amendment online You have a loss only for actual casualty damage to your property. File a tax amendment online However, if your home is in a federally declared disaster area, see Disaster Area Losses , later. File a tax amendment online Costs of photographs and appraisals. File a tax amendment online   Photographs taken after a casualty will be helpful in establishing the condition and value of the property after it was damaged. File a tax amendment online Photographs showing the condition of the property after it was repaired, restored, or replaced may also be helpful. File a tax amendment online   Appraisals are used to figure the decrease in FMV because of a casualty or theft. File a tax amendment online See Appraisal , earlier, under Figuring Decrease in FMV — Items To Consider, for information about appraisals. File a tax amendment online   The costs of photographs and appraisals used as evidence of the value and condition of property damaged as a result of a casualty are not a part of the loss. File a tax amendment online They are expenses in determining your tax liability. File a tax amendment online You can claim these costs as a miscellaneous itemized deduction subject to the 2%-of-adjusted-gross-income limit on Schedule A (Form 1040). File a tax amendment online Adjusted Basis The measure of your investment in the property you own is its basis. File a tax amendment online For property you buy, your basis is usually its cost to you. File a tax amendment online For property you acquire in some other way, such as inheriting it, receiving it as a gift, or getting it in a nontaxable exchange, you must figure your basis in another way, as explained in Publication 551. File a tax amendment online If you inherited the property from someone who died in 2010 and the executor of the decedent's estate made the election to file Form 8939, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. File a tax amendment online Adjustments to basis. File a tax amendment online    While you own the property, various events may take place that change your basis. File a tax amendment online Some events, such as additions or permanent improvements to the property, increase basis. File a tax amendment online Others, such as earlier casualty losses and depreciation deductions, decrease basis. File a tax amendment online When you add the increases to the basis and subtract the decreases from the basis, the result is your adjusted basis. File a tax amendment online See Publication 551 for more information on figuring the basis of your property. File a tax amendment online Insurance and Other Reimbursements If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. File a tax amendment online You do not have a casualty or theft loss to the extent you are reimbursed. File a tax amendment online If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. File a tax amendment online You must reduce your loss even if you do not receive payment until a later tax year. File a tax amendment online See Reimbursement Received After Deducting Loss , later. File a tax amendment online Failure to file a claim for reimbursement. File a tax amendment online   If your property is covered by insurance, you must file a timely insurance claim for reimbursement of your loss. File a tax amendment online Otherwise, you cannot deduct this loss as a casualty or theft. File a tax amendment online The portion of the loss usually not covered by insurance (for example, a deductible) is not subject to this rule. File a tax amendment online Example. File a tax amendment online You have a car insurance policy with a $1,000 deductible. File a tax amendment online Because your insurance did not cover the first $1,000 of an auto collision, the $1,000 would be deductible (subject to the $100 and 10% rules, discussed later). File a tax amendment online This is true, even if you do not file an insurance claim, because your insurance policy would never have reimbursed you for the deductible. File a tax amendment online Types of Reimbursements The most common type of reimbursement is an insurance payment for your stolen or damaged property. File a tax amendment online Other types of reimbursements are discussed next. File a tax amendment online Also see the Instructions for Form 4684. File a tax amendment online Employer's emergency disaster fund. File a tax amendment online   If you receive money from your employer's emergency disaster fund and you must use that money to rehabilitate or replace property on which you are claiming a casualty loss deduction, you must take that money into consideration in computing the casualty loss deduction. File a tax amendment online Take into consideration only the amount you used to replace your destroyed or damaged property. File a tax amendment online Example. File a tax amendment online Your home was extensively damaged by a tornado. File a tax amendment online Your loss after reimbursement from your insurance company was $10,000. File a tax amendment online Your employer set up a disaster relief fund for its employees. File a tax amendment online Employees receiving money from the fund had to use it to rehabilitate or replace their damaged or destroyed property. File a tax amendment online You received $4,000 from the fund and spent the entire amount on repairs to your home. File a tax amendment online In figuring your casualty loss, you must reduce your unreimbursed loss ($10,000) by the $4,000 you received from your employer's fund. File a tax amendment online Your casualty loss before applying the deduction limits (discussed later) is $6,000. File a tax amendment online Cash gifts. File a tax amendment online   If you receive excludable cash gifts as a disaster victim and there are no limits on how you can use the money, you do not reduce your casualty loss by these excludable cash gifts. File a tax amendment online This applies even if you use the money to pay for repairs to property damaged in the disaster. File a tax amendment online Example. File a tax amendment online Your home was damaged by a hurricane. File a tax amendment online Relatives and neighbors made cash gifts to you that were excludable from your income. File a tax amendment online You used part of the cash gifts to pay for repairs to your home. File a tax amendment online There were no limits or restrictions on how you could use the cash gifts. File a tax amendment online It was an excludable gift, so the money you received and used to pay for repairs to your home does not reduce your casualty loss on the damaged home. File a tax amendment online Insurance payments for living expenses. File a tax amendment online   You do not reduce your casualty loss by insurance payments you receive to cover living expenses in either of the following situations. File a tax amendment online You lose the use of your main home because of a casualty. File a tax amendment online Government authorities do not allow you access to your main home because of a casualty or threat of one. File a tax amendment online Inclusion in income. File a tax amendment online   If these insurance payments are more than the temporary increase in your living expenses, you must include the excess in your income. File a tax amendment online Report this amount on Form 1040, line 21. File a tax amendment online However, if the casualty occurs in a federally declared disaster area, none of the insurance payments are taxable. File a tax amendment online See Qualified disaster relief payments , later, under Disaster Area Losses. File a tax amendment online   A temporary increase in your living expenses is the difference between the actual living expenses you and your family incurred during the period you could not use your home and your normal living expenses for that period. File a tax amendment online Actual living expenses are the reasonable and necessary expenses incurred because of the loss of your main home. File a tax amendment online Generally, these expenses include the amounts you pay for the following. File a tax amendment online Renting suitable housing. File a tax amendment online Transportation. File a tax amendment online Food. File a tax amendment online Utilities. File a tax amendment online Miscellaneous services. File a tax amendment online Normal living expenses consist of these same expenses that you would have incurred but did not because of the casualty or the threat of one. File a tax amendment online Example. File a tax amendment online As a result of a fire, you vacated your apartment for a month and moved to a motel. File a tax amendment online You normally pay $525 a month for rent. File a tax amendment online None was charged for the month the apartment was vacated. File a tax amendment online Your motel rent for this month was $1,200. File a tax amendment online You normally pay $200 a month for food. File a tax amendment online Your food expenses for the month you lived in the motel were $400. File a tax amendment online You received $1,100 from your insurance company to cover your living expenses. File a tax amendment online You determine the payment you must include in income as follows. File a tax amendment online 1. File a tax amendment online Insurance payment for living expenses $1,100 2. File a tax amendment online Actual expenses during the month you are unable to use your home because of the fire $1,600   3. File a tax amendment online Normal living expenses 725   4. File a tax amendment online Temporary increase in living expenses: Subtract line 3  from line 2 875 5. File a tax amendment online Amount of payment includible in income: Subtract line 4 from line 1 $ 225 Tax year of inclusion. File a tax amendment online   You include the taxable part of the insurance payment in income for the year you regain the use of your main home or, if later, for the year you receive the taxable part of the insurance payment. File a tax amendment online Example. File a tax amendment online Your main home was destroyed by a tornado in August 2011. File a tax amendment online You regained use of your home in November 2012. File a tax amendment online The insurance payments you received in 2011 and 2012 were $1,500 more than the temporary increase in your living expenses during those years. File a tax amendment online You include this amount in income on your 2012 Form 1040. File a tax amendment online If, in 2013, you receive further payments to cover the living expenses you had in 2011 and 2012, you must include those payments in income on your 2013 Form 1040. File a tax amendment online Disaster relief. File a tax amendment online   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. File a tax amendment online Table 2. File a tax amendment online Deduction Limit Rules for Personal-Use and Employee Property       $100 Rule 10% Rule 2% Rule General Application You must reduce each casualty or theft loss by $100 when figuring your deduction. File a tax amendment online Apply this rule to personal-use property after you have figured the amount of your loss. File a tax amendment online You must reduce your total casualty or theft loss by 10% of your adjusted gross income. File a tax amendment online Apply this rule to personal-use property after you reduce each loss by $100 (the $100 rule). File a tax amendment online You must reduce your total casualty or theft loss by 2% of your adjusted gross income. File a tax amendment online Apply this rule to property you used in performing services as an employee after you have figured the amount of your loss and added it to your job expenses and most other miscellaneous itemized deductions. File a tax amendment online Single Event Apply this rule only once, even if many pieces of property are affected. File a tax amendment online Apply this rule only once, even if many pieces of property are affected. File a tax amendment online Apply this rule only once, even if many pieces of property are affected. File a tax amendment online More Than One Event Apply to the loss from each event. File a tax amendment online Apply to the total of all your losses from all events. File a tax amendment online Apply to the total of all your losses from all events. File a tax amendment online More Than One Person— With Loss From the   Same Event  (other than a married couple  filing jointly) Apply separately to each person. File a tax amendment online Apply separately to each person. File a tax amendment online Apply separately to each person. File a tax amendment online Married Couple—  With Loss From the  Same Event Filing Joint Return Apply as if you were one person. File a tax amendment online Apply as if you were one person. File a tax amendment online Apply as if you were one person. File a tax amendment online Filing Separate Return Apply separately to each spouse. File a tax amendment online Apply separately to each spouse. File a tax amendment online Apply separately to each spouse. File a tax amendment online More Than One Owner (other than a married couple filing jointly) Apply separately to each owner of jointly owned property. File a tax amendment online Apply separately to each owner of jointly owned property. File a tax amendment online Apply separately to each owner of jointly owned property. File a tax amendment online    Qualified disaster relief payments you receive for expenses you incurred as a result of a federally declared disaster, are not taxable income to you. File a tax amendment online For more information, see Qualified disaster relief payments under Disaster Area Losses, later. File a tax amendment online   Disaster unemployment assistance payments are unemployment benefits that are taxable. File a tax amendment online   Generally, disaster relief grants received under the Robert T. File a tax amendment online Stafford Disaster Relief and Emergency Assistance Act are not included in your income. File a tax amendment online See Federal disaster relief grants , later, under Disaster Area Losses. File a tax amendment online Loan proceeds. File a tax amendment online   Do not reduce your casualty loss by loan proceeds you use to rehabilitate or replace property on which you are claiming a casualty loss deduction. File a tax amendment online If you have a federal loan that is canceled (forgiven), see Federal loan canceled , later, under Disaster Area Losses. File a tax amendment online Reimbursement Received After Deducting Loss If you figured your casualty or theft loss using the amount of your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement. File a tax amendment online This section explains the adjustment you may have to make. File a tax amendment online Actual reimbursement less than expected. File a tax amendment online   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. File a tax amendment online Example. File a tax amendment online Your personal car had a FMV of $2,000 when it was destroyed in a collision with another car in 2012. File a tax amendment online The accident was due to the negligence of the other driver. File a tax amendment online At the end of 2012, there was a reasonable prospect that the owner of the other car would reimburse you in full. File a tax amendment online You did not have a deductible loss in 2012. File a tax amendment online In January 2013, the court awards you a judgment of $2,000. File a tax amendment online However, in July it becomes apparent that you will be unable to collect any amount from the other driver. File a tax amendment online Since this is your only casualty or theft loss, you can deduct the loss in 2013 that is figured by applying the Deduction Limits (discussed later). File a tax amendment online Actual reimbursement more than expected. File a tax amendment online   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. File a tax amendment online However, if any part of the original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. File a tax amendment online You do not refigure your tax for the year you claimed the deduction. File a tax amendment online See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. File a tax amendment online Example. File a tax amendment online In 2012, a hurricane destroyed your motorboat. File a tax amendment online Your loss was $3,000, and you estimated that your insurance would cover $2,500 of it. File a tax amendment online You did not itemize deductions on your 2012 return, so you could not deduct the loss. File a tax amendment online When the insurance company reimburses you for the loss, you do not report any of the reimbursement as income. File a tax amendment online This is true even if it is for the full $3,000 because you did not deduct the loss on your 2012 return. File a tax amendment online The loss did not reduce your tax. File a tax amendment online    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. File a tax amendment online If you have already taken a deduction for a loss and you receive the reimbursement in a later year, you may have to include the gain in your income for the later year. File a tax amendment online Include the gain as ordinary income up to the amount of your deduction that reduced your tax for the earlier year. File a tax amendment online You may be able to postpone reporting any remaining gain as explained under Postponement of Gain, later. File a tax amendment online Actual reimbursement same as expected. File a tax amendment online   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. File a tax amendment online Example. File a tax amendment online In December 2013, you had a collision while driving your personal car. File a tax amendment online Repairs to the car cost $950. File a tax amendment online You had $100 deductible collision insurance. File a tax amendment online Your insurance company agreed to reimburse you for the rest of the damage. File a tax amendment online Because you expected a reimbursement from the insurance company, you did not have a casualty loss deduction in 2013. File a tax amendment online Due to the $100 rule, you cannot deduct the $100 you paid as the deductible. File a tax amendment online When you receive the $850 from the insurance company in 2014, do not report it as income. File a tax amendment online Deduction Limits After you have figured your casualty or theft loss, you must figure how much of the loss you can deduct. File a tax amendment online The deduction for casualty and theft losses of employee property and personal-use property is limited. File a tax amendment online A loss on employee property is subject to the 2% rule, discussed next. File a tax amendment online With certain exceptions, a loss on property you own for your personal use is subject to the $100 and 10% rules, discussed later. File a tax amendment online The 2%, $100, and 10% rules are also summarized in Table 2 . File a tax amendment online Losses on business property (other than employee property) and income-producing property are not subject to these rules. File a tax amendment online However, if your casualty or theft loss involved a home you used for business or rented out, your deductible loss may be limited. File a tax amendment online See the Instructions for Form 4684, Section B. File a tax amendment online If the casualty or theft loss involved property used in a passive activity, see Form 8582, Passive Activity Loss Limitations, and its instructions. File a tax amendment online 2% Rule The casualty and theft loss deduction for employee property, when added to your job expenses and most other miscellaneous itemized deductions on Schedule A (Form 1040) or Form 1040NR, Schedule A, must be reduced by 2% of your adjusted gross income. File a tax amendment online Employee property is property used in performing services as an employee. File a tax amendment online $100 Rule After you have figured your casualty or theft loss on personal-use property, as discussed earlier, you must reduce that loss by $100. File a tax amendment online This reduction applies to each total casualty or theft loss. File a tax amendment online It does not matter how many pieces of property are involved in an event. File a tax amendment online Only a single $100 reduction applies. File a tax amendment online Example. File a tax amendment online You have $750 deductible collision insurance on your car. File a tax amendment online The car is damaged in a collision. File a tax amendment online The insurance company pays you for the damage minus the $750 deductible. File a tax amendment online The amount of the casualty loss is based solely on the deductible. File a tax amendment online The casualty loss is $650 ($750 − $100) because the first $100 of a casualty loss on personal-use property is not deductible. File a tax amendment online Single event. File a tax amendment online   Generally, events closely related in origin cause a single casualty. File a tax amendment online It is a single casualty when the damage is from two or more closely related causes, such as wind and flood damage caused by the same storm. File a tax amendment online A single casualty may also damage two or more pieces of property, such as a hailstorm that damages both your home and your car parked in your driveway. File a tax amendment online Example 1. File a tax amendment online A thunderstorm destroyed your pleasure boat. File a tax amendment online You also lost some boating equipment in the storm. File a tax amendment online Your loss was $5,000 on the boat and $1,200 on the equipment. File a tax amendment online Your insurance company reimbursed you $4,500 for the damage to your boat. File a tax amendment online You had no insurance coverage on the equipment. File a tax amendment online Your casualty loss is from a single event and the $100 rule applies once. File a tax amendment online Figure your loss before applying the 10% rule (discussed later) as follows. File a tax amendment online     Boat Equipment 1. File a tax amendment online Loss $5,000 $1,200 2. File a tax amendment online Subtract insurance 4,500 -0- 3. File a tax amendment online Loss after reimbursement $ 500 $1,200 4. File a tax amendment online Total loss $1,700 5. File a tax amendment online Subtract $100 100 6. File a tax amendment online Loss before 10% rule $1,600 Example 2. File a tax amendment online Thieves broke into your home in January and stole a ring and a fur coat. File a tax amendment online You had a loss of $200 on the ring and $700 on the coat. File a tax amendment online This is a single theft. File a tax amendment online The $100 rule applies to the total $900 loss. File a tax amendment online Example 3. File a tax amendment online In September, hurricane winds blew the roof off your home. File a tax amendment online Flood waters caused by the hurricane further damaged your home and destroyed your furniture and personal car. File a tax amendment online This is considered a single casualty. File a tax amendment online The $100 rule is applied to your total loss from the flood waters and the wind. File a tax amendment online More than one loss. File a tax amendment online   If you have more than one casualty or theft loss during your tax year, you must reduce each loss by $100. File a tax amendment online Example. File a tax amendment online Your family car was damaged in an accident in January. File a tax amendment online Your loss after the insurance reimbursement was $75. File a tax amendment online In February, your car was damaged in another accident. File a tax amendment online This time your loss after the insurance reimbursement was $90. File a tax amendment online Apply the $100 rule to each separate casualty loss. File a tax amendment online Since neither accident resulted in a loss of over $100, you are not entitled to any deduction for these accidents. File a tax amendment online More than one person. File a tax amendment online   If two or more individuals (other than a husband and wife filing a joint return) have losses from the same casualty or theft, the $100 rule applies separately to each individual. File a tax amendment online Example. File a tax amendment online A fire damaged your house and also damaged the personal property of your house guest. File a tax amendment online You must reduce your loss by $100. File a tax amendment online Your house guest must reduce his or her loss by $100. File a tax amendment online Married taxpayers. File a tax amendment online   If you and your spouse file a joint return, you are treated as one individual in applying the $100 rule. File a tax amendment online It does not matter whether you own the property jointly or separately. File a tax amendment online   If you and your spouse have a casualty or theft loss and you file separate returns, each of you must reduce your loss by $100. File a tax amendment online This is true even if you own the property jointly. File a tax amendment online If one spouse owns the property, only that spouse can figure a loss deduction on a separate return. File a tax amendment online   If the casualty or theft loss is on property you own as tenants by the entirety, each of you can figure your deduction on only one-half of the loss on separate returns. File a tax amendment online Neither of you can figure your deduction on the entire loss on a separate return. File a tax amendment online Each of you must reduce the loss by $100. File a tax amendment online More than one owner. File a tax amendment online   If two or more individuals (other than a husband and wife filing a joint return) have a loss on property jointly owned, the $100 rule applies separately to each. File a tax amendment online For example, if two sisters live together in a home they own jointly and they have a casualty loss on the home, the $100 rule applies separately to each sister. File a tax amendment online 10% Rule You must reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. File a tax amendment online Apply this rule after you reduce each loss by $100. File a tax amendment online For more information, see the Form 4684 instructions. File a tax amendment online If you have both gains and losses from casualties or thefts, see Gains and losses , later in this discussion. File a tax amendment online Example. File a tax amendment online In June, you discovered that your house had been burglarized. File a tax amendment online Your loss after insurance reimbursement was $2,000. File a tax amendment online Your adjusted gross income for the year you discovered the theft is $29,500. File a tax amendment online Figure your theft loss as follows. File a tax amendment online 1. File a tax amendment online Loss after insurance $2,000 2. File a tax amendment online Subtract $100 100 3. File a tax amendment online Loss after $100 rule $1,900 4. File a tax amendment online Subtract 10% of $29,500 AGI $2,950 5. File a tax amendment online 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 ($2,950). File a tax amendment online More than one loss. File a tax amendment online   If you have more than one casualty or theft loss during your tax year, reduce each loss by any reimbursement and by $100. File a tax amendment online Then you must reduce the total of all your losses by 10% of your adjusted gross income. File a tax amendment online Example. File a tax amendment online In March, you had a car accident that totally destroyed your car. File a tax amendment online You did not have collision insurance on your car, so you did not receive any insurance reimbursement. File a tax amendment online Your loss on the car was $1,800. File a tax amendment online In November, a fire damaged your basement and totally destroyed the furniture, washer, dryer, and other items you had stored there. File a tax amendment online Your loss on the basement items after reimbursement was $2,100. File a tax amendment online Your adjusted gross income for the year that the accident and fire occurred is $25,000. File a tax amendment online You figure your casualty loss deduction as follows. File a tax amendment online     Car Basement 1. File a tax amendment online Loss $1,800 $2,100 2. File a tax amendment online Subtract $100 per incident 100 100 3. File a tax amendment online Loss after $100 rule $1,700 $2,000 4. File a tax amendment online Total loss $3,700 5. File a tax amendment online Subtract 10% of $25,000 AGI 2,500 6. File a tax amendment online Casualty loss deduction $1,200 Married taxpayers. File a tax amendment online   If you and your spouse file a joint return, you are treated as one individual in applying the 10% rule. File a tax amendment online It does not matter if you own the property jointly or separately. File a tax amendment online   If you file separate returns, the 10% rule applies to each return on which a loss is claimed. File a tax amendment online More than one owner. File a tax amendment online   If two or more individuals (other than husband and wife filing a joint return) have a loss on property that is owned jointly, the 10% rule applies separately to each. File a tax amendment online Gains and losses. File a tax amendment online   If you have casualty or theft gains as well as losses to personal-use property, you must compare your total gains to your total losses. File a tax amendment online Do this after you have reduced each loss by any reimbursements and by $100 but before you have reduced the losses by 10% of your adjusted gross income. File a tax amendment online Casualty or theft gains do not include gains you choose to postpone. File a tax amendment online See Postponement of Gain, later. File a tax amendment online Losses more than gains. File a tax amendment online   If your losses are more than your recognized gains, subtract your gains from your losses and reduce the result by 10% of your adjusted gross income. File a tax amendment online The rest, if any, is your deductible loss from personal-use property. File a tax amendment online Example. File a tax amendment online Your theft loss after reducing it by reimbursements and by $100 is $2,700. File a tax amendment online Your casualty gain is $700. File a tax amendment online Your loss is more than your gain, so you must reduce your $2,000 net loss ($2,700 − $700) by 10% of your adjusted gross income. File a tax amendment online Gains more than losses. File a tax amendment online   If your recognized gains are more than your losses, subtract your losses from your gains. File a tax amendment online The difference is treated as a capital gain and must be reported on Schedule D (Form 1040). File a tax amendment online The 10% rule does not apply to your gains. File a tax amendment online Example. File a tax amendment online Your theft loss is $600 after reducing it by reimbursements and by $100. File a tax amendment online Your casualty gain is $1,600. File a tax amendment online Because your gain is more than your loss, you must report the $1,000 net gain ($1,600 − $600) on Schedule D (Form 1040). File a tax amendment online More information. File a tax amendment online   For information on how to figure recognized gains, see Figuring a Gain , later. File a tax amendment online Figuring the Deduction Generally, you must figure your loss separately for each item stolen, damaged, or destroyed. File a tax amendment online However, a special rule applies to real property you own for personal use. File a tax amendment online Real property. File a tax amendment online   In figuring a loss to real estate you own for personal use, all improvements (such as buildings and ornamental trees and the land containing the improvements) are considered together. File a tax amendment online Example 1. File a tax amendment online In June, a fire destroyed your lakeside cottage, which cost $144,800 (including $14,500 for the land) several years ago. File a tax amendment online (Your land was not damaged. File a tax amendment online ) This was your only casualty or theft loss for the year. File a tax amendment online The FMV of the property immediately before the fire was $180,000 ($145,000 for the cottage and $35,000 for the land). File a tax amendment online The FMV immediately after the fire was $35,000 (value of the land). File a tax amendment online You collected $130,000 from the insurance company. File a tax amendment online Your adjusted gross income for the year the fire occurred is $80,000. File a tax amendment online Your deduction for the casualty loss is $6,700, figured in the following manner. File a tax amendment online 1. File a tax amendment online Adjusted basis of the entire property (cost in this example) $144,800 2. File a tax amendment online FMV of entire property  before fire $180,000 3. File a tax amendment online FMV of entire property after fire 35,000 4. File a tax amendment online Decrease in FMV of entire property (line 2 − line 3) $145,000 5. File a tax amendment online Loss (smaller of line 1 or line 4) $144,800 6. File a tax amendment online Subtract insurance 130,000 7. File a tax amendment online Loss after reimbursement $14,800 8. File a tax amendment online Subtract $100 100 9. File a tax amendment online Loss after $100 rule $14,700 10. File a tax amendment online Subtract 10% of $80,000 AGI 8,000 11. File a tax amendment online Casualty loss deduction $ 6,700 Example 2. File a tax amendment online You bought your home a few years ago. File a tax amendment online You paid $150,000 ($10,000 for the land and $140,000 for the house). File a tax amendment online You also spent an additional $2,000 for landscaping. File a tax amendment online This year a fire destroyed your home. File a tax amendment online The fire also damaged the shrubbery and trees in your yard. File a tax amendment online The fire was your only casualty or theft loss this year. File a tax amendment online Competent appraisers valued the property as a whole at $175,000 before the fire, but only $50,000 after the fire. File a tax amendment online Shortly after the fire, the insurance company paid you $95,000 for the loss. File a tax amendment online Your adjusted gross income for this year is $70,000. File a tax amendment online You figure your casualty loss deduction as follows. File a tax amendment online 1. File a tax amendment online Adjusted basis of the entire property (cost of land, building, and landscaping) $152,000 2. File a tax amendment online FMV of entire property  before fire $175,000 3. File a tax amendment online FMV of entire property after fire 50,000 4. File a tax amendment online Decrease in FMV of entire property (line 2 − line 3) $125,000 5. File a tax amendment online Loss (smaller of line 1 or line 4) $125,000 6. File a tax amendment online Subtract insurance 95,000 7. File a tax amendment online Loss after reimbursement $30,000 8. File a tax amendment online Subtract $100 100 9. File a tax amendment online Loss after $100 rule $29,900 10. File a tax amendment online Subtract 10% of $70,000 AGI 7,000 11. File a tax amendment online Casualty loss deduction $ 22,900 Personal property. File a tax amendment online   Personal property is any property that is not real property. File a tax amendment online If your personal property is stolen or is damaged or destroyed by a casualty, you must figure your loss separately for each item of property. File a tax amendment online Then combine these separate losses to figure the total loss. File a tax amendment online Reduce the total loss by $100 and 10% of your adjusted gross income to figure the loss deduction. File a tax amendment online Example 1. File a tax amendment online In August, a storm destroyed your pleasure boat, which cost $18,500. File a tax amendment online This was your only casualty or theft loss for the year. File a tax amendment online Its FMV immediately before the storm was $17,000. File a tax amendment online You had no insurance, but were able to salvage the motor of the boat and sell it for $200. File a tax amendment online Your adjusted gross income for the year the casualty occurred is $70,000. File a tax amendment online Although the motor was sold separately, it is part of the boat and not a separate item of property. File a tax amendment online You figure your casualty loss deduction as follows. File a tax amendment online 1. File a tax amendment online Adjusted basis (cost in this example) $18,500 2. File a tax amendment online FMV before storm $17,000 3. File a tax amendment online FMV after storm 200 4. File a tax amendment online Decrease in FMV  (line 2 − line 3) $16,800 5. File a tax amendment online Loss (smaller of line 1 or line 4) $16,800 6. File a tax amendment online Subtract insurance -0- 7. File a tax amendment online Loss after reimbursement $16,800 8. File a tax amendment online Subtract $100 100 9. File a tax amendment online Loss after $100 rule $16,700 10. File a tax amendment online Subtract 10% of $70,000 AGI 7,000 11. File a tax amendment online Casualty loss deduction $ 9,700 Example 2. File a tax amendment online In June, you were involved in an auto accident that totally destroyed your personal car and your antique pocket watch. File a tax amendment online You had bought the car for $30,000. File a tax amendment online The FMV of the car just before the accident was $17,500. File a tax amendment online Its FMV just after the accident was $180 (scrap value). File a tax amendment online Your insurance company reimbursed you $16,000. File a tax amendment online Your watch was not insured. File a tax amendment online You had purchased it for $250. File a tax amendment online Its FMV just before the accident was $500. File a tax amendment online Your adjusted gross income for the year the accident occurred is $97,000. File a tax amendment online Your casualty loss deduction is zero, figured as follows. File a tax amendment online     Car Watch 1. File a tax amendment online Adjusted basis (cost) $30,000 $250 2. File a tax amendment online FMV before accident $17,500 $500 3. File a tax amendment online FMV after accident 180 -0- 4. File a tax amendment online Decrease in FMV (line 2 − line 3) $17,320 $500 5. File a tax amendment online Loss (smaller of line 1 or line 4) $17,320 $250 6. File a tax amendment online Subtract insurance 16,000 -0- 7. File a tax amendment online Loss after reimbursement $1,320 $250 8. File a tax amendment online Total loss $1,570 9. File a tax amendment online Subtract $100 100 10. File a tax amendment online Loss after $100 rule $1,470 11. File a tax amendment online Subtract 10% of $97,000 AGI 9,700 12. File a tax amendment online Casualty loss deduction $ -0- Both real and personal properties. File a tax amendment online   When a casualty involves both real and personal properties, you must figure the loss separately for each type of property. File a tax amendment online However, you apply a single $100 reduction to the total loss. File a tax amendment online Then, you apply the 10% rule to figure the casualty loss deduction. File a tax amendment online Example. File a tax amendment online In July, a hurricane damaged your home, which cost you $164,000 including land. File a tax amendment online The FMV of the property (both building and land) immediately before the storm was $170,000 and its FMV immediately after the storm was $100,000. File a tax amendment online Your household furnishings were also damaged. File a tax amendment online You separately figured the loss on each damaged household item and arrived at a total loss of $600. File a tax amendment online You collected $50,000 from the insurance company for the damage to your home, but your household furnishings were not insured. File a tax amendment online Your adjusted gross income for the year the hurricane occurred is $65,000. File a tax amendment online You figure your casualty loss deduction from the hurricane in the following manner. File a tax amendment online 1. File a tax amendment online Adjusted basis of real property (cost in this example) $164,000 2. File a tax amendment online FMV of real property before hurricane $170,000 3. File a tax amendment online FMV of real property after hurricane 100,000 4. File a tax amendment online Decrease in FMV of real property (line 2 − line 3) $70,000 5. File a tax amendment online Loss on real property (smaller of line 1 or line 4) $70,000 6. File a tax amendment online Subtract insurance 50,000 7. File a tax amendment online Loss on real property after reimbursement $20,000 8. File a tax amendment online Loss on furnishings $600 9. File a tax amendment online Subtract insurance -0- 10. File a tax amendment online Loss on furnishings after reimbursement $600 11. File a tax amendment online Total loss (line 7 plus line 10) $20,600 12. File a tax amendment online Subtract $100 100 13. File a tax amendment online Loss after $100 rule $20,500 14. File a tax amendment online Subtract 10% of $65,000 AGI 6,500 15. File a tax amendment online Casualty loss deduction $14,000 Property used partly for business and partly for personal purposes. File a tax amendment online   When property is used partly for personal purposes and partly for business or income-producing purposes, the casualty or theft loss deduction must be figured separately for the personal-use portion and for the business or income-producing portion. File a tax amendment online You must figure each loss separately because the losses attributed to these two uses are figured in two different ways. File a tax amendment online When figuring each loss, allocate the total cost or basis, the FMV before and after the casualty or theft loss, and the insurance or other reimbursement between the business and personal use of the property. File a tax amendment online The $100 rule and the 10% rule apply only to the casualty or theft loss on the personal-use portion of the property. File a tax amendment online Example. File a tax amendment online You own a building that you constructed on leased land. File a tax amendment online You use half of the building for your business and you live in the other half. File a tax amendment online The cost of the building was $400,000. File a tax amendment online You made no further improvements or additions to it. File a tax amendment online A flood in March damaged the entire building. File a tax amendment online The FMV of the building was $380,000 immediately before the flood and $320,000 afterwards. File a tax amendment online Your insurance company reimbursed you $40,000 for the flood damage. File a tax amendment online Depreciation on the business part of the building before the flood totaled $24,000. File a tax amendment online Your adjusted gross income for the year the flood occurred is $125,000. File a tax amendment online You have a deductible business casualty loss of $10,000. File a tax amendment online You do not have a deductible personal casualty loss because of the 10% rule. File a tax amendment online You figure your loss as follows. File a tax amendment online     Business   Personal     Part   Part 1. File a tax amendment online Cost (total $400,000) $200,000   $200,000 2. File a tax amendment online Subtract depreciation 24,000   -0- 3. File a tax amendment online Adjusted basis $176,000   $200,000 4. File a tax amendment online FMV before flood (total $380,000) $190,000   $190,000 5. File a tax amendment online FMV after flood (total $320,000) 160,000   160,000 6. File a tax amendment online Decrease in FMV  (line 4 − line 5) $30,000   $30,000 7. File a tax amendment online Loss (smaller of line 3 or line 6) $30,000   $30,000 8. File a tax amendment online Subtract insurance 20,000   20,000 9. File a tax amendment online Loss after reimbursement $10,000   $10,000 10. File a tax amendment online Subtract $100 on personal-use property -0-   100 11. File a tax amendment online Loss after $100 rule $10,000   $9,900 12. File a tax amendment online Subtract 10% of $125,000 AGI on personal-use property -0-   12,500 13. File a tax amendment online Deductible business loss $10,000     14. File a tax amendment online Deductible personal loss $-0- Figuring a Gain 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. File a tax amendment online Your gain is figured as follows. File a tax amendment online The amount you receive (discussed next), minus Your adjusted basis in the property at the time of the casualty or theft. File a tax amendment online See Adjusted Basis , earlier, for information on adjusted basis. File a tax amendment online 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. File a tax amendment online Amount you receive. File a tax amendment online   The amount you receive includes any money plus the value of any property you receive minus any expenses you have in obtaining reimbursement. File a tax amendment online It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. File a tax amendment online Example. File a tax amendment online A hurricane destroyed your personal residence and the insurance company awarded you $145,000. File a tax amendment online You received $140,000 in cash. File a tax amendment online The remaining $5,000 was paid directly to the holder of a mortgage on the property. File a tax amendment online The amount you received includes the $5,000 reimbursement paid on the mortgage. File a tax amendment online Main home destroyed. File a tax amendment online   If you have a gain because your main home was destroyed, you generally can exclude the gain from your income as if you had sold or exchanged your home. File a tax amendment online You may be able to exclude up to $250,000 of the gain (up to $500,000 if married filing jointly). File a tax amendment online To exclude a gain, you generally must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date it was destroyed. File a tax amendment online For information on this exclusion, see Publication 523. File a tax amendment online 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. File a tax amendment online See Postponement of Gain , later. File a tax amendment online Reporting a gain. File a tax amendment online   You generally must report your gain as income in the year you receive the reimbursement. File a tax amendment online However, you do not have to report your gain if you meet certain requirements and choose to postpone reporting the gain according to the rules explained under Postponement of Gain, next. File a tax amendment online   For information on how to report a gain, see How To Report Gains and Losses , later. File a tax amendment online    If you have a casualty or theft gain on personal-use property that you choose to postpone reporting (as explained next) and you also have another casualty or theft loss on personal-use property, do not consider the gain you are postponing when figuring your casualty or theft loss deduction. File a tax amendment online See 10% Rule under Deduction Limits, earlier. File a tax amendment online Postponement of 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 or stolen property. File a tax amendment online Your basis in the new property is generally the same as your adjusted basis in the property it replaces. File a tax amendment online You must ordinarily report the gain on your stolen or destroyed property if you receive money or unlike property as reimbursement. File a tax amendment online However, you can choose to postpone reporting the gain if you purchase property that is similar or related in service or use to the stolen or destroyed property within a specified replacement period, discussed later. File a tax amendment online You also can choose to postpone reporting the gain if you purchase a controlling interest (at least 80%) in a corporation owning property that is similar or related in service or use to the property. File a tax amendment online See Controlling interest in a corporation , later. File a tax amendment online If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. File a tax amendment online To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. File a tax amendment online 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. File a tax amendment online Example. File a tax amendment online In 1970, you bought an oceanfront cottage for your personal use at a cost of $18,000. File a tax amendment online You made no further improvements or additions to it. File a tax amendment online When a storm destroyed the cottage this January, the cottage was worth $250,000. File a tax amendment online You received $146,000 from the insurance company in March. File a tax amendment online You had a gain of $128,000 ($146,000 − $18,000). File a tax amendment online You spent $144,000 to rebuild the cottage. File a tax amendment online Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. File a tax amendment online Buying replacement property from a related person. File a tax amendment online   You cannot postpone reporting a gain from a casualty or theft if you buy the replacement property from a related person (discussed later). File a tax amendment online This rule applies to the following taxpayers. File a tax amendment online C corporations. File a tax amendment online Partnerships in which more than 50% of the capital or profits interests is owned by C corporations. File a tax amendment online All others (including individuals, partnerships — other than those in (2) — and S corporations) if the total realized gain for the tax year on all destroyed or stolen properties on which there are realized gains is more than $100,000. File a tax amendment online For casualties and thefts described in (3) above, gains cannot be offset by any losses when determining whether the total gain is more than $100,000. File a tax amendment online If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. File a tax amendment online If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. File a tax amendment online Exception. File a tax amendment online   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 destroyed or stolen property. File a tax amendment online Related persons. File a tax amendment online   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. File a tax amendment online For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. File a tax amendment online Death of a taxpayer. File a tax amendment online   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. File a tax amendment online The executor of the estate or the person succeeding to the funds from the casualty or theft cannot postpone reporting the gain by buying replacement property. File a tax amendment online Replacement Property You must buy replacement property for the specific purpose of replacing your destroyed or stolen property. File a tax amendment online Property you acquire as a gift or inheritance does not qualify. File a tax amendment online You do not have to use the same funds you receive as