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I Didn T File Taxes For 2012

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I Didn T File Taxes For 2012

I didn t file taxes for 2012 Publication 536 - Introductory Material Table of Contents Reminders IntroductionOrdering forms and publications. I didn t file taxes for 2012 Tax questions. I didn t file taxes for 2012 Useful Items - You may want to see: Reminders Future developments. I didn t file taxes for 2012  For the latest developments related to Publication 536, such as legislation enacted after we release it, go to www. I didn t file taxes for 2012 irs. I didn t file taxes for 2012 gov/pub536. I didn t file taxes for 2012 Photographs of missing children. I didn t file taxes for 2012  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. I didn t file taxes for 2012 Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. I didn t file taxes for 2012 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. I didn t file taxes for 2012 Introduction If your deductions for the year are more than your income for the year, you may have a net operating loss (NOL). I didn t file taxes for 2012 An NOL year is the year in which an NOL occurs. I didn t file taxes for 2012 You can use an NOL by deducting it from your income in another year or years. I didn t file taxes for 2012 What this publication covers. I didn t file taxes for 2012   This publication discusses NOLs for individuals, estates, and trusts. I didn t file taxes for 2012 It covers: How to figure an NOL, When to use an NOL, How to claim an NOL deduction, and How to figure an NOL carryover. I didn t file taxes for 2012 To have an NOL, your loss must generally be caused by deductions from your: Trade or business, Work as an employee, Casualty and theft losses, Moving expenses, or Rental property. I didn t file taxes for 2012 A loss from operating a business is the most common reason for an NOL. I didn t file taxes for 2012 Partnerships and S corporations generally cannot use an NOL. I didn t file taxes for 2012 However, partners or shareholders can use their separate shares of the partnership's or S corporation's business income and business deductions to figure their individual NOLs. I didn t file taxes for 2012 Keeping records. I didn t file taxes for 2012   You should keep records for any tax year that generates an NOL for 3 years after you have used the carryback/carryforward or 3 years after the carryforward expires. I didn t file taxes for 2012    You should attach all required documents to the Form 1045 or Form 1040X. I didn t file taxes for 2012 For details, see the instructions for Form 1045 or Form 1040X. I didn t file taxes for 2012 What is not covered in this publication?   The following topics are not covered in this publication. I didn t file taxes for 2012 Bankruptcies. I didn t file taxes for 2012 See Publication 908, Bankruptcy Tax Guide. I didn t file taxes for 2012 NOLs of corporations. I didn t file taxes for 2012 See Publication 542, Corporations. I didn t file taxes for 2012 Section references. I didn t file taxes for 2012   Section references are to the Internal Revenue Code unless otherwise noted. I didn t file taxes for 2012 Comments and suggestions. I didn t file taxes for 2012   We welcome your comments about this publication and your suggestions for future editions. I didn t file taxes for 2012   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. I didn t file taxes for 2012 NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. I didn t file taxes for 2012 Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. I didn t file taxes for 2012   You can send your comments from www. I didn t file taxes for 2012 irs. I didn t file taxes for 2012 gov/formspubs/. I didn t file taxes for 2012 Click on “More Information. I didn t file taxes for 2012 ” and then on “Comment on Tax Forms and Publications. I didn t file taxes for 2012 ”   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. I didn t file taxes for 2012 Ordering forms and publications. I didn t file taxes for 2012   Visit www. I didn t file taxes for 2012 irs. I didn t file taxes for 2012 gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. I didn t file taxes for 2012 Internal Revenue Service 1201 N. I didn t file taxes for 2012 Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. I didn t file taxes for 2012   If you have a tax question, check the information available on IRS. I didn t file taxes for 2012 gov or call 1-800-829-1040. I didn t file taxes for 2012 We cannot answer tax questions sent to either of the above addresses. I didn t file taxes for 2012 Useful Items - You may want to see: Form (and Instructions) 1040X Amended U. I didn t file taxes for 2012 S. I didn t file taxes for 2012 Individual Income Tax Return 1045 Application for Tentative Refund   See How To Get Tax Help near the end of this publication for information about getting these forms. I didn t file taxes for 2012 Prev  Up  Next   Home   More Online Publications
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A-Z Index for Business
Find it Fast! Know what you're looking for and want to find it fast? Select business topics using our A-Z listing, or by business type such as sole proprietor, corporation, etc. We also provide links to major business subjects, such as Business Expenses, which provides a gateway to all related information on that subject.

Affordable Care Act Tax Provisions
Health coverage legislation enacted this year and future changes.

Business Tax Credits
A list of forms for claiming business tax credits, and a complete explanation about when carryovers, credits and deductions cease.

Filing and Payments
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Filing Past Due Tax Returns
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Información y recursos para dueños de pequeños negocios. Infórmese sobre sus obligaciones tributarias.

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Report of Foreign Bank and Financial Accounts (FBAR)
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).

Small Business Taxes: The Virtual Workshop
This workshop helps business owners understand federal tax obligations.

State Government Websites
A collection of links to State government Web sites with useful information for businesses.

Struggling with Paying Your Taxes? Let IRS Help You Get a Fresh Start.
Help from the IRS for individuals and small businesses struggling to meet their tax obligations. On February 24, 2011, the Internal Revenue Service Commissioner announced an initiative to help people get a fresh start with their tax liabilities. The initiative centers on changes to IRS collection practices that will lessen the negative impact on taxpayers.

Page Last Reviewed or Updated: 06-Dec-2013

The I Didn T File Taxes For 2012

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