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Income Tax Filing Extension

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The Income Tax Filing Extension

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