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Irs Gov

Amended Federal Tax ReturnHrblockfreeAmend Your Tax ReturnState Tax Preparation FreeFree Fillable FormsExpress 10402011 1040 Tax FormFederal Ez FormIrs Form 1040ezTax FormsIrs Gov Tax ReturnStudent Filing Taxes 2013140ez 2011Irs 2012 Tax Forms 1040ezHow To Fill Out Form 1040x1040ez Electronic FilingWhere Do I Send My 2012 Federal Income Tax ReturnTurbotax MilitaryH&r Block Tax Return1040 Ez Instructions 20121040ez Tax TablesHow Do I File 2012 Tax ReturnH&r Block Online TaxIrs Form 1040ez 2010Tax Return Forms 2011Irs Amended Tax Form1040a Instruction BookIrs Gov Form 1040nrTurbotax Military EditionFile Taxes For 2011 FreeFile Taxes Free Federal And StateFile State Return OnlyHr Block Free Tax FilingInternal Revenue Tax Forms 2010Tax 2011Military Filing TaxesAmend TaxNon Resident State Tax ReturnInstructions For Form 1040ezFile State Taxes Only

Irs Gov

Irs gov Index A Accuracy of deposits rule, Accuracy of Deposits Rule Additional Medicare Tax, Reminders, Additional Medicare Tax withholding. Irs gov , Additional Medicare Tax withholding adjustments. Irs gov Adjustments, 13. Irs gov Reporting Adjustments to Form 941 or Form 944 Aliens, nonresident, Withholding income taxes on the wages of nonresident alien employees. Irs gov , Withholding of social security and Medicare taxes on nonresident aliens. Irs gov Allocated tips, Allocated tips. Irs gov Archer MSAs, Health Savings Accounts and medical savings accounts. Irs gov Assistance (see Tax help) B Backup withholding, Nonpayroll Income Tax Withholding Business expenses, employee, Employee business expense reimbursements. Irs gov C Calendar, Calendar Certain foreign persons treated as American employers, Foreign persons treated as American employers. Irs gov Change of business address or responsible party, Change of Business Address or Responsible Party COBRA premium assistance credit, COBRA premium assistance credit. Irs gov Correcting employment taxes, Correcting employment taxes. Irs gov Correcting errors, (prior period adjustments) Form 941, Prior Period Adjustments D Delivery services, private, Private Delivery Services Depositing taxes Penalties, Deposit Penalties Rules, 11. Irs gov Depositing Taxes Differential wage payments, Differential wage payments. Irs gov E E-file, Electronic filing by reporting agents. Irs gov Election worker, State and local government employers. Irs gov Electronic, Electronic deposit requirement. Irs gov Electronic deposit requirement, Electronic deposit requirement. Irs gov Electronic Federal Tax Payment System (EFTPS), Electronic deposit requirement. Irs gov Electronic filing, Electronic Filing and Payment, Electronic filing by reporting agents. Irs gov Eligibility for employment, Hiring New Employees Employees defined, Employee status under common law. Irs gov Employer identification number (EIN), 1. Irs gov Employer Identification Number (EIN) Employer responsibilities, Paying Wages, Pensions, or Annuities F Family employees, 3. Irs gov Family Employees Final return, Final return. Irs gov Form 944, 12. Irs gov Filing Form 941 or Form 944 Fringe benefits, Fringe benefits. Irs gov FUTA tax, 14. Irs gov Federal Unemployment (FUTA) Tax G Government employers, Federal Government employers. Irs gov H Health insurance plans, Health insurance plans. Irs gov Health Savings Accounts (HSAs), Health Savings Accounts and medical savings accounts. Irs gov Hiring new employees, Hiring New Employees Household employees, Exceptions. Irs gov I Income tax withholding, Income Tax Withholding, 16. Irs gov How To Use the Income Tax Withholding Tables Information returns, Information Returns International social security agreements, International social security agreements. Irs gov L Long-term care insurance, Health insurance plans. Irs gov Lookback period, When To Deposit M Meals and lodging, Meals and lodging. Irs gov Medical care, Medical care reimbursements. Irs gov Medical savings accounts, Health Savings Accounts and medical savings accounts. Irs gov Medicare tax, Social Security and Medicare Taxes Mileage, Per diem or other fixed allowance. Irs gov Monthly deposit schedule, Monthly Deposit Schedule Moving expenses, Moving expenses. Irs gov N New employees, Hiring New Employees Noncash wages, Wages not paid in money. Irs gov Nonemployee compensation, Nonpayroll Income Tax Withholding P Part-time workers, Part-Time Workers Payroll period, 8. Irs gov Payroll Period Penalties, Deposit Penalties, Penalties. Irs gov Private delivery services, Private Delivery Services Publications (see Tax help) R Reconciling Forms W-2 and Forms 941 or 944, Reconciling Forms W-2, W-3, and 941 or 944. Irs gov Recordkeeping, Recordkeeping Reimbursements, Accountable plan. Irs gov , Nonaccountable plan. Irs gov , Per diem or other fixed allowance. Irs gov Repayments, wages, Wage Repayments S Seasonal employers, Exceptions. Irs gov Semiweekly deposit schedule, Semiweekly Deposit Schedule Sick pay, Sick pay. Irs gov Social security and Medicare taxes, Social Security and Medicare Taxes Social security number, employee, 4. Irs gov Employee's Social Security Number (SSN) Spouse, Business Owned and Operated by Spouses Standard mileage rate, Per diem or other fixed allowance. Irs gov Statutory employees, Employee status under common law. Irs gov Statutory nonemployees, Statutory employees. Irs gov Successor employer, Successor employer. Irs gov , Successor employer. Irs gov Supplemental wages, 7. Irs gov Supplemental Wages T Tax help, How To Get Tax Help Telephone help, Telephone Help Third-party sick pay tax adjustment, Adjustment of tax on third-party sick pay. Irs gov Tip Rate Determination Agreement, Tip Rate Determination and Education Program. Irs gov Tip Rate Determination and Education Program, Tip Rate Determination and Education Program. Irs gov Tips, 6. Irs gov Tips, Tips treated as supplemental wages. Irs gov Trust fund recovery penalty, Trust fund recovery penalty. Irs gov TTY/TDD information, How To Get Tax Help U Unemployment tax, federal, 14. Irs gov Federal Unemployment (FUTA) Tax V Vacation pay, Vacation pay. Irs gov W Wage repayments, Wage Repayments Wages defined, 5. Irs gov Wages and Other Compensation Wages not paid in money, Wages not paid in money. Irs gov Withholding Backup, Nonpayroll Income Tax Withholding Certificate, Using Form W-4 to figure withholding. Irs gov Exemption, Exemption from federal income tax withholding. Irs gov Fringe benefits, Withholding on fringe benefits. Irs gov Income tax, Income Tax Withholding Levies, Amounts exempt from levy on wages, salary, and other income. Irs gov Nonresident aliens, Withholding of social security and Medicare taxes on nonresident aliens. Irs gov Pensions and annuities, Nonpayroll Income Tax Withholding Percentage method, Percentage Method Social security and Medicare taxes, Social Security and Medicare Taxes Table instructions, 16. Irs gov How To Use the Income Tax Withholding Tables Tips, Tips treated as supplemental wages. Irs gov Wage bracket method, Wage Bracket Method Z Zero wage return, Paying Wages, Pensions, or Annuities Prev  Up     Home   More Online Publications
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Understanding your CP21I Notice

We made changes to your tax return for the tax year specified on the notice for Individual
Retirement Arrangement (IRA) taxes. You owe money on your taxes as a result
of these changes.

Tax publications you may find useful

How to get help

Calling the toll free number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

  • Read your notice carefully ― it will explain why you owe money on your taxes.
  • Pay the amount owed by the date on the notice's payment coupon.
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Answers to Common Questions

What should I do if I disagree with the changes you made?
If you disagree, contact us at the toll-free number listed on the top right corner of your notice.

What happens if I can't pay the full amount I owe?
You can arrange to make a payment plan with us if you can't pay the full amount you owe.

Am I charged interest on the money I owe?
If you don't full pay the amount you owe by the date on the payment coupon, interest will accrue on the unpaid balance after that date.

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Yes, you'll receive a late payment penalty. You can contact us at the number listed on your notice if you’re unable to pay the full amount shown in your specific notice because of circumstances beyond your control. Contact us by the due date of your payment and, depending on your situation, we may be able to remove the penalty.

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There are other options, such as paying by credit card. Note: There may be a fee to pay by credit card.

What if I need to make another correction to my account?
You'll need to file Form 1040X, Amended U.S. Individual Income Tax Return.

What if I have tried to get answers and after contacting IRS several times have not been successful?
Call Taxpayer Advocate at 1-877-777-4778 or for TTY/TDD 1-800-829-4059.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Page Last Reviewed or Updated: 26-Feb-2014

The Irs Gov

Irs gov 11. Irs gov   Casualties, Thefts, and Condemnations Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Casualties and TheftsDeductible losses. Irs gov Nondeductible losses. Irs gov Family pet. Irs gov Progressive deterioration. Irs gov Decline in market value of stock. Irs gov Mislaid or lost property. Irs gov 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. Irs gov Related persons. Irs gov Replacement Property Replacement Period How To Postpone Gain Disaster Area LossesWho is eligible. Irs gov Covered disaster area. Irs gov Reporting Gains and Losses Introduction This chapter explains the tax treatment of casualties, thefts, and condemnations. Irs gov A casualty occurs when property is damaged, destroyed, or lost due to a sudden, unexpected, or unusual event. Irs gov A theft occurs when property is stolen. Irs gov A condemnation occurs when private property is legally taken for public use without the owner's consent. Irs gov A casualty, theft, or condemnation may result in a deductible loss or taxable gain on your federal income tax return. Irs gov 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. Irs gov 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. Irs gov 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. Irs gov For more information, see Postponing Gain , later. Irs gov 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. Irs gov Casualties and Thefts If your property is destroyed, damaged, or stolen, you may have a deductible loss. Irs gov 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. Irs gov Casualty. Irs gov   A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Irs gov A sudden event is one that is swift, not gradual or progressive. Irs gov An unexpected event is one that is ordinarily unanticipated and unintended. Irs gov 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. Irs gov Deductible losses. Irs gov   Deductible casualty losses can result from a number of different causes, including the following. Irs gov Airplane crashes. Irs gov Car, truck, or farm equipment accidents not resulting from your willful act or willful negligence. Irs gov Earthquakes. Irs gov Fires (but see Nondeductible losses next for exceptions). Irs gov Floods. Irs gov Freezing. Irs gov 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. Irs gov Lightning. Irs gov Storms, including hurricanes and tornadoes. Irs gov Terrorist attacks. Irs gov Vandalism. Irs gov Volcanic eruptions. Irs gov Nondeductible losses. Irs gov   A casualty loss is not deductible if the damage or destruction is caused by the following. Irs gov Accidentally breaking articles such as glassware or china under normal conditions. Irs gov A family pet (explained below). Irs gov A fire if you willfully set it, or pay someone else to set it. Irs gov A car, truck, or farm equipment accident if your willful negligence or willful act caused it. Irs gov The same is true if the willful act or willful negligence of someone acting for you caused the accident. Irs gov Progressive deterioration (explained below). Irs gov Family pet. Irs gov   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. Irs gov Example. Irs gov You keep your horse in your yard. Irs gov The ornamental fruit trees in your yard were damaged when your horse stripped the bark from them. Irs gov Some of the trees were completely girdled and died. Irs gov Because the damage was not unexpected or unusual, the loss is not deductible. Irs gov Progressive deterioration. Irs gov   Loss of property due to progressive deterioration is not deductible as a casualty loss. Irs gov This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Irs gov Examples of damage due to progressive deterioration include damage from rust, corrosion, or termites. Irs gov However, weather-related conditions or disease may cause another type of involuntary conversion. Irs gov See Other Involuntary Conversions , later. Irs gov Theft. Irs gov   A theft is the taking and removing of money or property with the intent to deprive the owner of it. Irs gov 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. Irs gov You do not need to show a conviction for theft. Irs gov   Theft includes the taking of money or property by the following means: Blackmail, Burglary, Embezzlement, Extortion, Kidnapping for ransom, Larceny, Robbery, or Threats. Irs gov The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Irs gov Decline in market value of stock. Irs gov   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. Irs gov 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. Irs gov You report a capital loss on Schedule D (Form 1040). Irs gov For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Irs gov Mislaid or lost property. Irs gov   The simple disappearance of money or property is not a theft. Irs gov 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. Irs gov Example. Irs gov A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Irs gov The diamond falls from the ring and is never found. Irs gov The loss of the diamond is a casualty. Irs gov Farming Losses You can deduct certain casualty or theft losses that occur in the business of farming. Irs gov The following is a discussion of some losses you can deduct and some you cannot deduct. Irs gov Livestock or produce bought for resale. Irs gov   Casualty or theft losses of livestock or produce bought for resale are deductible if you report your income on the cash method. Irs gov 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. Irs gov You cannot take a separate deduction. Irs gov Livestock, plants, produce, and crops raised for sale. Irs gov   Losses of livestock, plants, produce, and crops raised for sale are generally not deductible if you report your income on the cash method. Irs gov You have already deducted the cost of raising these items as farm expenses, so their basis is equal to zero. Irs gov   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. Irs gov You usually have a tax basis if you capitalized the expenses associated with these plants under the uniform capitalization rules. Irs gov The uniform capitalization rules are discussed in chapter 6. Irs gov   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. Irs gov You get the deduction by omitting the item from your inventory at the close of your tax year. Irs gov You cannot take a separate casualty or theft deduction. Irs gov Income loss. Irs gov   A loss of future income is not deductible. Irs gov Example. Irs gov A severe flood destroyed your crops. Irs gov 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 . Irs gov You estimate that the crop loss will reduce your farm income by $25,000. Irs gov This loss of future income is also not deductible. Irs gov Loss of timber. Irs gov   If you sell timber downed as a result of a casualty, treat the proceeds from the sale as a reimbursement. Irs gov If you use the proceeds to buy qualified replacement property, you can postpone reporting the gain. Irs gov See Postponing Gain , later. Irs gov Property used in farming. Irs gov   Casualty and theft losses of property used in your farm business usually result in deductible losses. Irs gov 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. Irs gov See How To Figure a Loss , later. Irs gov Raised draft, breeding, dairy, or sporting animals. Irs gov   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. Irs gov 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. Irs gov You use inventories to determine your income and you included the animals in your inventory. Irs gov 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. Irs gov When you include livestock in inventory, its last inventory value is its basis. Irs gov 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. Irs gov You cannot take a separate deduction. Irs gov 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. Irs gov Farm property. Irs gov   Farm property is the property you use in your farming business. Irs gov 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. Irs gov   If your farm property was partially damaged, use the steps shown under Personal-use property next to figure your casualty loss. Irs gov However, the deduction limits, discussed later, do not apply to farm property. Irs gov Personal-use property. Irs gov   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. Irs gov The following items are examples of personal-use property: Your main home. Irs gov Furniture and electronics used in your main home and not used in a home office or for business purposes. Irs gov Clothing and jewelry. Irs gov An automobile used for nonbusiness purposes. Irs gov You figure the casualty or theft loss on this property by taking the following steps. Irs gov Determine your adjusted basis in the property before the casualty or theft. Irs gov Determine the decrease in fair market value of the property as a result of the casualty or theft. Irs gov From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you receive or expect to receive. Irs gov You must apply the deduction limits, discussed later, to determine your deductible loss. Irs gov    You can use Publication 584 to list your stolen or damaged personal-use property and figure your loss. Irs gov It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. Irs gov Adjusted basis. Irs gov   Adjusted basis is your basis (usually cost) increased or decreased by various events, such as improvements and casualty losses. Irs gov For more information about adjusted basis, see chapter 6. Irs gov Decrease in fair market value (FMV). Irs gov   The decrease in FMV is the difference between the property's value immediately before the casualty or theft and its value immediately afterward. Irs gov FMV is defined in chapter 10 under Payments Received or Considered Received . Irs gov Appraisal. Irs gov   To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Irs gov But other measures, such as the cost of cleaning up or making repairs (discussed next) can be used to establish decreases in FMV. Irs gov   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. Irs gov The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Irs gov This information is needed to limit any deduction to the actual loss resulting from damage to the property. Irs gov Cost of cleaning up or making repairs. Irs gov   The cost of cleaning up after a casualty is not part of a casualty loss. Irs gov Neither is the cost of repairing damaged property after a casualty. Irs gov 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. Irs gov The repairs are actually made. Irs gov The repairs are necessary to bring the property back to its condition before the casualty. Irs gov The amount spent for repairs is not excessive. Irs gov The repairs fix the damage only. Irs gov The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Irs gov Related expenses. Irs gov   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. Irs gov However, they may be deductible as farm business expenses if the damaged or stolen property is farm property. Irs gov Separate computations for more than one item of property. Irs gov   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. Irs gov Then combine the losses to determine your total loss. Irs gov    There is an exception to this rule for personal-use real property. Irs gov See Exception for personal-use real property, later. Irs gov Example. Irs gov A fire on your farm damaged a tractor and the barn in which it was stored. Irs gov The tractor had an adjusted basis of $3,300. Irs gov Its FMV was $28,000 just before the fire and $10,000 immediately afterward. Irs gov The barn had an adjusted basis of $28,000. Irs gov Its FMV was $55,000 just before the fire and $25,000 immediately afterward. Irs gov You received insurance reimbursements of $2,100 on the tractor and $26,000 on the barn. Irs gov Figure your deductible casualty loss separately for the two items of property. Irs gov     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. Irs gov   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. Irs gov Figure the loss using the smaller of the following. Irs gov The decrease in FMV of the entire property. Irs gov The adjusted basis of the entire property. Irs gov Example. Irs gov You bought a farm in 1990 for $160,000. Irs gov The adjusted basis of the residential part is now $128,000. Irs gov In 2013, a windstorm blew down shade trees and three ornamental trees planted at a cost of $7,500 on the residential part. Irs gov The adjusted basis of the residential part includes the $7,500. Irs gov The fair market value (FMV) of the residential part immediately before the storm was $400,000, and $385,000 immediately after the storm. Irs gov The trees were not covered by insurance. Irs gov 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. Irs gov   If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Irs gov You do not have a casualty or theft loss to the extent you are reimbursed. Irs gov   If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Irs gov You must reduce your loss even if you do not receive payment until a later tax year. Irs gov    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. Irs gov You may have to include a portion of these payments in your income. Irs gov See Insurance payments for living expenses in Publication 547 for details. Irs gov Disaster relief. Irs gov   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. Irs gov Excludable cash gifts you receive also do not reduce your casualty loss if there are no limits on how you can use the money. Irs gov   Generally, disaster relief grants received under the Robert T. Irs gov Stafford Disaster Relief and Emergency Assistance Act are not included in your income. Irs gov See Federal disaster relief grants , later, under Disaster Area Losses . Irs gov   Qualified disaster relief payments for expenses you incurred as a result of a federally declared disaster are not taxable income to you. Irs gov See Qualified disaster relief payments , later, under Disaster Area Losses . Irs gov Reimbursement received after deducting loss. Irs gov   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. Irs gov Actual reimbursement less than expected. Irs gov   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. Irs gov Actual reimbursement more than expected. Irs gov   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. Irs gov 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. Irs gov Do not refigure your tax for the year you claimed the deduction. Irs gov See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. Irs gov 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. Irs gov 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. Irs gov Actual reimbursement same as expected. Irs gov   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. Irs gov Lump-sum reimbursement. Irs gov   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. Irs gov Figure the gain or loss separately for each asset that has a separate basis. Irs gov Adjustments to basis. Irs gov   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. Irs gov The result is your adjusted basis in the property. Irs gov Amounts you spend on repairs to restore your property to its pre-casualty condition increase your adjusted basis. Irs gov See Adjusted Basis in chapter 6 for more information. Irs gov Example. Irs gov You built a new silo for $25,000. Irs gov This is the basis in your silo because that is the total cost you incurred to build it. Irs gov During the year, a tornado damaged your silo and your allowable casualty loss deduction was $1,000. Irs gov 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. Irs gov Your adjusted basis in the silo after the casualty is $26,000 ($25,000 - $1,000 - $4,000 + $6,000). Irs gov 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). Irs gov There are two limits on the deduction for casualty or theft loss of personal-use property. Irs gov You figure these limits on Form 4684. Irs gov $100 rule. Irs gov   You must reduce each casualty or theft loss on personal-use property by $100. Irs gov This rule applies after you have subtracted any reimbursement. Irs gov 10% rule. Irs gov   You must further reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Irs gov Apply this rule after you reduce each loss by $100. Irs gov Adjusted gross income is on line 38 of Form 1040. Irs gov Example. Irs gov In June, you discovered that your house had been burglarized. Irs gov Your loss after insurance reimbursement was $2,000. Irs gov Your adjusted gross income for the year you discovered the burglary is $57,000. Irs gov Figure your theft loss deduction as follows: 1. Irs gov Loss after insurance $2,000 2. Irs gov Subtract $100 100 3. Irs gov Loss after $100 rule $1,900 4. Irs gov Subtract 10% (. Irs gov 10) × $57,000 AGI $5,700 5. Irs gov 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). Irs gov    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. Irs gov See 10% Rule in Publication 547. Irs gov When Loss Is Deductible Generally, you can deduct casualty losses that are not reimbursable only in the tax year in which they occur. Irs gov You generally can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. Irs gov However, losses in federally declared disaster areas are subject to different rules. Irs gov See Disaster Area Losses , later, for an exception. Irs gov 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. Irs gov Leased property. Irs gov   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. Irs gov This is true even if the loss occurred or the liability was paid in a different year. Irs gov You are not entitled to a deduction until your liability under the lease can be determined with reasonable accuracy. Irs gov Your liability can be determined when a claim for recovery is settled, adjudicated, or abandoned. Irs gov Example. Irs gov Robert leased a tractor from First Implement, Inc. Irs gov , for use in his farm business. Irs gov The tractor was destroyed by a tornado in June 2012. Irs gov The loss was not insured. Irs gov First Implement billed Robert for the fair market value of the tractor on the date of the loss. Irs gov Robert disagreed with the bill and refused to pay it. Irs gov First Implement later filed suit in court against Robert. Irs gov 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. Irs gov Robert paid $20,000 in June 2013. Irs gov He can claim the $20,000 as a loss on his 2013 tax return. Irs gov Net operating loss (NOL). Irs gov   If your deductions, including casualty or theft loss deductions, are more than your income for the year, you may have an NOL. Irs gov An NOL can be carried back or carried forward and deducted from income in other years. Irs gov See Publication 536 for more information on NOLs. Irs gov Proof of Loss To deduct a casualty or theft loss, you must be able to prove that there was a casualty or theft. Irs gov You must have records to support the amount you claim for the loss. Irs gov Casualty loss proof. Irs gov   For a casualty loss, your records should show all the following information. Irs gov The type of casualty (car accident, fire, storm, etc. Irs gov ) and when it occurred. Irs gov That the loss was a direct result of the casualty. Irs gov 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. Irs gov Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Irs gov Theft loss proof. Irs gov   For a theft loss, your records should show all the following information. Irs gov When you discovered your property was missing. Irs gov That your property was stolen. Irs gov That you were the owner of the property. Irs gov Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Irs gov Figuring a Gain A casualty or theft may result in a taxable gain. Irs gov 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. Irs gov You generally report your gain as income in the year you receive the reimbursement. Irs gov However, depending on the type of property you receive, you may not have to report your gain. Irs gov See Postponing Gain , later. Irs gov 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. Irs gov 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. Irs gov Amount you receive. Irs gov   The amount you receive includes any money plus the value of any property you receive, minus any expenses you have in obtaining reimbursement. Irs gov It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. Irs gov Example. Irs gov A tornado severely damaged your barn. Irs gov The adjusted basis of the barn was $25,000. Irs gov Your insurance company reimbursed you $40,000 for the damaged barn. Irs gov However, you had legal expenses of $2,000 to collect that insurance. Irs gov Your insurance minus your expenses to collect the insurance is more than your adjusted basis in the barn, so you have a gain. Irs gov 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. Irs gov Some of these are discussed in the following paragraphs. Irs gov Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes. Irs gov You report the gain or deduct the loss on your tax return for the year you realize it. Irs gov However, depending on the type of property you receive, you may not have to report your gain on the involuntary conversion. Irs gov See Postponing Gain , later. Irs gov Condemnation Condemnation is the process by which private property is legally taken for public use without the owner's consent. Irs gov 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. Irs gov The owner receives a condemnation award (money or property) in exchange for the property taken. Irs gov A condemnation is a forced sale, the owner being the seller and the condemning authority being the buyer. Irs gov Threat of condemnation. Irs gov   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. Irs gov Main home condemned. Irs gov   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. Irs gov For information on this exclusion, see Publication 523. Irs gov 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. Irs gov See Postponing Gain , later. Irs gov (You cannot deduct a loss from the condemnation of your main home. Irs gov ) More information. Irs gov   For information on how to figure the gain or loss on condemned property, see chapter 1 in Publication 544. Irs gov Also see Postponing Gain , later, to find out if you can postpone reporting the gain. Irs gov 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. Irs gov Livestock Losses Diseased livestock. Irs gov   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. Irs gov If the livestock were raised or purchased for resale, follow the rules for livestock discussed earlier under Farming Losses . Irs gov Otherwise, figure the gain or loss from these conversions using the rules discussed under Determining Gain or Loss in chapter 8. Irs gov If you replace the livestock, you may be able to postpone reporting the gain. Irs gov See Postponing Gain below. Irs gov Reporting dispositions of diseased livestock. Irs gov   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. Irs gov You must also include other information on this statement. Irs gov See How To Postpone Gain , later, under Postponing Gain . Irs gov Weather-related sales of livestock. Irs gov   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. Irs gov 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. Irs gov Figure the gain or loss using the rules discussed under Determining Gain or Loss in chapter 8. Irs gov If you replace the livestock, you may be able to postpone reporting the gain. Irs gov See Postponing Gain below. Irs gov Example. Irs gov It is your usual business practice to sell five of your dairy animals during the year. Irs gov This year you sold 20 dairy animals because of drought. Irs gov The sale of 15 animals is treated as an involuntary conversion. Irs gov    If you do not replace the livestock, you may be able to report the gain in the following year's income. Irs gov This rule also applies to other livestock (including poultry). Irs gov See Sales Caused by Weather-Related Conditions in chapter 3. Irs gov 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. Irs gov Treat the loss as a loss from an involuntary conversion. Irs gov The loss equals the previously capitalized reforestation costs you had to duplicate on replanting. Irs gov You deduct the loss on the return for the year the seedlings died. Irs gov 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. Irs gov Your basis in the new property is generally the same as your adjusted basis in the property it replaces. Irs gov You must ordinarily report the gain on your stolen, destroyed, or other involuntarily converted property if you receive money or unlike property as reimbursement. Irs gov 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. Irs gov If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. Irs gov To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. Irs gov 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. Irs gov Example 1. Irs gov In 1985, you constructed a barn to store farm equipment at a cost of $20,000. Irs gov In 1987, you added a silo to the barn at a cost of $15,000 to store grain. Irs gov In May of this year, the property was worth $100,000. Irs gov In June the barn and silo were destroyed by a tornado. Irs gov At the time of the tornado, you had an adjusted basis of $0 in the property. Irs gov You received $85,000 from the insurance company. Irs gov You had a gain of $85,000 ($85,000 – $0). Irs gov You spent $80,000 to rebuild the barn and silo. Irs gov Since this is less than the insurance proceeds received, you must include $5,000 ($85,000 – $80,000) in your income. Irs gov Example 2. Irs gov In 1970, you bought a cabin in the mountains for your personal use at a cost of $18,000. Irs gov You made no further improvements or additions to it. Irs gov When a storm destroyed the cabin this January, the cabin was worth $250,000. Irs gov You received $146,000 from the insurance company in March. Irs gov You had a gain of $128,000 ($146,000 − $18,000). Irs gov You spent $144,000 to rebuild the cabin. Irs gov Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. Irs gov Buying replacement property from a related person. Irs gov   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). Irs gov This rule applies to the following taxpayers. Irs gov C corporations. Irs gov Partnerships in which more than 50% of the capital or profits interest is owned by C corporations. Irs gov 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. Irs gov 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. Irs gov If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. Irs gov If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. Irs gov Exception. Irs gov   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. Irs gov Related persons. Irs gov   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. Irs gov For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Irs gov Death of a taxpayer. Irs gov   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. Irs gov 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. Irs gov Replacement Property You must buy replacement property for the specific purpose of replacing your property. Irs gov Your replacement property must be similar or related in service or use to the property it replaces. Irs gov You do not have to use the same funds you receive as reimbursement for your old property to acquire the replacement property. Irs gov 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. Irs gov Property you acquire by gift or inheritance does not qualify as replacement property. Irs gov Owner-user. Irs gov   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. Irs gov 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. Irs gov A grinding mill that replaces a tractor does not qualify. Irs gov Neither does a breeding or draft animal that replaces a dairy cow. Irs gov Soil or other environmental contamination. Irs gov   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. Irs gov Weather-related conditions. Irs gov   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. Irs gov Example. Irs gov Each year you normally sell 25 cows from your beef herd. Irs gov However, this year you had to sell 50 cows. Irs gov 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. Irs gov 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. Irs gov Standing crop destroyed by casualty. Irs gov   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. Irs gov 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). Irs gov 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. Irs gov Timber loss. Irs gov   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. Irs gov If you bought the standing timber within the replacement period, you can postpone reporting the gain. Irs gov Business or income-producing property located in a federally declared disaster area. Irs gov   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. Irs gov For more information, see Disaster Area Losses in Publication 547. Irs gov Substituting replacement property. Irs gov   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. Irs gov This is true even if you acquire the other property within the replacement period. Irs gov 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. Irs gov Basis of replacement property. Irs gov   You must reduce the basis of your replacement property (its cost) by the amount of postponed gain. Irs gov In this way, tax on the gain is postponed until you dispose of the replacement property. Irs gov Replacement Period To postpone reporting your gain, you must buy replacement property within a specified period of time. Irs gov This is the replacement period. Irs gov The replacement period begins on the date your property was damaged, destroyed, stolen, sold, or exchanged. Irs gov 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. Irs gov Example. Irs gov You are a calendar year taxpayer. Irs gov While you were on vacation, farm equipment that cost $2,200 was stolen from your farm. Irs gov You discovered the theft when you returned to your farm on November 11, 2012. Irs gov Your insurance company investigated the theft and did not settle your claim until January 5, 2013, when they paid you $3,000. Irs gov You first realized a gain from the reimbursement for the theft during 2013, so you have until December 31, 2015, to replace the property. Irs gov Main home in disaster area. Irs gov   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. Irs gov See Disaster Area Losses , later. Irs gov Property in the Midwestern disaster areas. Irs gov   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. Irs gov This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Midwestern disaster areas. Irs gov Property in the Kansas disaster area. Irs gov   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. Irs gov This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Kansas disaster area. Irs gov Property in the Hurricane Katrina disaster area. Irs gov   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. Irs gov This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. Irs gov Weather-related sales of livestock in an area eligible for federal assistance. Irs gov   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. Irs gov The IRS may extend the replacement period on a regional basis if the weather-related conditions continue for longer than 3 years. Irs gov   For information on extensions of the replacement period because of persistent drought, see Notice 2006-82, 2006-39 I. Irs gov R. Irs gov B. Irs gov 529, available at  www. Irs gov irs. Irs gov gov/irb/2006-39_IRB/ar11. Irs gov html. Irs gov 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. Irs gov gov. Irs gov Condemnation. Irs gov   The replacement period for a condemnation begins on the earlier of the following dates. Irs gov The date on which you disposed of the condemned property. Irs gov The date on which the threat of condemnation began. Irs gov 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. Irs gov 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. Irs gov Business or investment real property. Irs gov   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. Irs gov Extension. Irs gov   You can apply for an extension of the replacement period. Irs gov Send your written application to the Internal Revenue Service Center where you file your tax return. Irs gov See your tax return instructions for the address. Irs gov Include all the details about your need for an extension. Irs gov Make your application before the end of the replacement period. Irs gov 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. Irs gov You will get an extension of the replacement period if you can show reasonable cause for not making the replacement within the regular period. Irs gov How To Postpone Gain You postpone reporting your gain by reporting your choice on your tax return for the year you have the gain. Irs gov You have the gain in the year you receive insurance proceeds or other reimbursements that result in a gain. Irs gov Required statement. Irs gov   You should attach a statement to your return for the year you have the gain. Irs gov This statement should include all the following information. Irs gov The date and details of the casualty, theft, or other involuntary conversion. Irs gov The insurance or other reimbursement you received. Irs gov How you figured the gain. Irs gov Replacement property acquired before return filed. Irs gov   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. Irs gov The replacement property. Irs gov The postponed gain. Irs gov The basis adjustment that reflects the postponed gain. Irs gov Any gain you are reporting as income. Irs gov Replacement property acquired after return filed. Irs gov   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. Irs gov   You should then attach another statement to your return for the year in which you buy the replacement property. Irs gov This statement should contain detailed information on the replacement property. Irs gov 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. Irs gov Include in the statement detailed information on the replacement property bought in that year. Irs gov Reporting weather-related sales of livestock. Irs gov   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. Irs gov Evidence of the weather-related conditions that forced the sale or exchange of the livestock. Irs gov The gain realized on the sale or exchange. Irs gov The number and kind of livestock sold or exchanged. Irs gov The number of livestock of each kind you would have sold or exchanged under your usual business practice. Irs gov   Show all the following information and the preceding information on the return for the year in which you replace the livestock. Irs gov The dates you bought the replacement property. Irs gov The cost of the replacement property. Irs gov Description of the replacement property (for example, the number and kind of the replacement livestock). Irs gov Amended return. Irs gov   You must file an amended return (Form 1040X) for the tax year of the gain in either of the following situations. Irs gov You do not acquire replacement property within the replacement period, plus extensions. Irs gov On this amended return, you must report the gain and pay any additional tax due. Irs gov 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. Irs gov On this amended return, you must report the part of the gain that cannot be postponed and pay any additional tax due. Irs gov Disaster Area Losses Special rules apply to federally declared disaster area losses. Irs gov 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. Irs gov Stafford Disaster Relief and Emergency Assistance Act. Irs gov It includes a major disaster or emergency declaration under the act. Irs gov 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. Irs gov fema. Irs gov gov. Irs gov This part discusses the special rules for when to deduct a disaster area loss and what tax deadlines may be postponed. Irs gov For other special rules, see Disaster Area Losses in Publication 547. Irs gov When to deduct the loss. Irs gov   You generally must deduct a casualty loss in the year it occurred. Irs gov 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. Irs gov If you make this choice, the loss is treated as having occurred in the preceding year. Irs gov    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. Irs gov   You must make the choice to take your casualty loss for the disaster in the preceding year by the later of the following dates. Irs gov The due date (without extensions) for filing your tax return for the tax year in which the disaster actually occurred. Irs gov The due date (with extensions) for the return for the preceding tax year. Irs gov Federal disaster relief grants. Irs gov   Do not include post-disaster relief grants received under the Robert T. Irs gov 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. Irs gov Do not deduct casualty losses or medical expenses to the extent they are specifically reimbursed by these disaster relief grants. Irs gov 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. Irs gov Unemployment assistance payments under the Act are taxable unemployment compensation. Irs gov Qualified disaster relief payments. Irs gov   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. Irs gov These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). Irs gov No withholding applies to these payments. Irs gov   Qualified disaster relief payments include payments you receive (regardless of the source) for the following expenses. Irs gov Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a federally declared disaster. Irs gov Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a federally declared disaster. Irs gov (A personal residence can be a rented residence or one you own. Irs gov ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a federally declared disaster. Irs gov   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. Irs gov    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. Irs gov Qualified disaster mitigation payments. Irs gov   Qualified disaster mitigation payments made under the Robert T. Irs gov 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. Irs gov These are payments you, as a property owner, receive to reduce the risk of future damage to your property. Irs gov You cannot increase your basis in property, or take a deduction or credit, for expenditures made with respect to those payments. Irs gov Sale of property under hazard mitigation program. Irs gov   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. Irs gov You report the gain or deduct the loss on your tax return for the year you realize it. Irs gov (You cannot deduct a loss on personal-use property unless the loss resulted from a casualty, as discussed earlier. Irs gov ) 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. Irs gov See Postponing Gain , earlier, for the rules that apply. Irs gov Other federal assistance programs. Irs gov    For more information about other federal assistance programs, see Crop Insurance and Crop Disaster Payments and Feed Assistance and Payments in chapter 3 earlier. Irs gov Postponed tax deadlines. Irs gov   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. Irs gov 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. Irs gov   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). Irs gov Go to http://www. Irs gov irs. Irs gov gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. Irs gov Who is eligible. Irs gov   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Irs gov Any individual whose main home is located in a covered disaster area (defined next). Irs gov Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Irs gov Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered disaster area. Irs gov 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. Irs gov The main home or principal place of business does not have to be located in the covered disaster area. Irs gov 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. Irs gov The spouse on a joint return with a taxpayer who is eligible for postponements. Irs gov 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. Irs gov Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. Irs gov Any other person determined by the IRS to be affected by a federally declared disaster. Irs gov Covered disaster area. Irs gov   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. Irs gov Abatement of interest and penalties. Irs gov   The IRS may abate the interest and penalties on the underpaid income tax for the length of any postponement of tax deadlines. Irs gov 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. Irs gov Form 4684. Irs gov   Use this form to report your gains and losses from casualties and thefts. Irs gov Form 4797. Irs gov   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. Irs gov 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. Irs gov Form 8949. Irs gov   Use this form to report gain from an involuntary conversion (other than from casualty or theft) of personal-use property. Irs gov Schedule A (Form 1040). Irs gov   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. Irs gov Schedule D (Form 1040). Irs gov   Use this form to carry over the following gains. Irs gov Net gain shown on Form 4797 from an involuntary conversion of business property held for more than 1 year. Irs gov Net gain shown on Form 4684 from the casualty or theft of personal-use property. Irs gov    Also use this form to figure the overall gain or loss from transactions reported on Form 8949. Irs gov Schedule F (Form 1040). Irs gov   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. Irs gov Prev  Up  Next   Home   More Online Publications