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2011 Irs Forms

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2011 Irs Forms

2011 irs forms 5. 2011 irs forms   Personal Use of Dwelling Unit (Including Vacation Home) Table of Contents Dividing Expenses Dwelling Unit Used as a HomeMain home. 2011 irs forms Shared equity financing agreement. 2011 irs forms Donation of use of the property. 2011 irs forms Examples. 2011 irs forms Days used for repairs and maintenance. 2011 irs forms Days used as a main home before or after renting. 2011 irs forms Reporting Income and DeductionsNot used as a home. 2011 irs forms Used as a home but rented less than 15 days. 2011 irs forms Used as a home and rented 15 days or more. 2011 irs forms If you have any personal use of a dwelling unit (including a vacation home) that you rent, you must divide your expenses between rental use and personal use. 2011 irs forms In general, your rental expenses will be no more than your total expenses multiplied by a fraction; the denominator of which is the total number of days the dwelling unit is used and the numerator of which is the total number of days actually rented at a fair rental price. 2011 irs forms Only your rental expenses may deducted on Schedule E (Form 1040). 2011 irs forms Some of your personal expenses may be deductible if you itemize your deductions on Schedule A (Form 1040). 2011 irs forms You must also determine if the dwelling unit is considered a home. 2011 irs forms The amount of rental expenses that you can deduct may be limited if the dwelling unit is considered a home. 2011 irs forms Whether a dwelling unit is considered a home depends on how many days during the year are considered to be days of personal use. 2011 irs forms There is a special rule if you used the dwelling unit as a home and you rented it for less than 15 days during the year. 2011 irs forms Dwelling unit. 2011 irs forms   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. 2011 irs forms It also includes all structures or other property belonging to the dwelling unit. 2011 irs forms A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities. 2011 irs forms   A dwelling unit does not include property (or part of the property) used solely as a hotel, motel, inn, or similar establishment. 2011 irs forms Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year. 2011 irs forms Example. 2011 irs forms You rent a room in your home that is always available for short-term occupancy by paying customers. 2011 irs forms You do not use the room yourself and you allow only paying customers to use the room. 2011 irs forms This room is used solely as a hotel, motel, inn, or similar establishment and is not a dwelling unit. 2011 irs forms Dividing Expenses If you use a dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. 2011 irs forms When dividing your expenses, follow these rules. 2011 irs forms Any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. 2011 irs forms (This rule does not apply when determining whether you used the unit as a home. 2011 irs forms ) Any day that the unit is available for rent but not actually rented is not a day of rental use. 2011 irs forms Fair rental price. 2011 irs forms   A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. 2011 irs forms The rent you charge is not a fair rental price if it is substantially less than the rents charged for other properties that are similar to your property in your area. 2011 irs forms   Ask yourself the following questions when comparing another property with yours. 2011 irs forms Is it used for the same purpose? Is it approximately the same size? Is it in approximately the same condition? Does it have similar furnishings? Is it in a similar location? If any of the answers are no, the properties probably are not similar. 2011 irs forms Example. 2011 irs forms Your beach cottage was available for rent from June 1 through August 31 (92 days). 2011 irs forms Except for the first week in August (7 days), when you were unable to find a renter, you rented the cottage at a fair rental price during that time. 2011 irs forms The person who rented the cottage for July allowed you to use it over the weekend (2 days) without any reduction in or refund of rent. 2011 irs forms Your family also used the cottage during the last 2 weeks of May (14 days). 2011 irs forms The cottage was not used at all before May 17 or after August 31. 2011 irs forms You figure the part of the cottage expenses to treat as rental expenses as follows. 2011 irs forms The cottage was used for rental a total of 85 days (92 − 7). 2011 irs forms The days it was available for rent but not rented (7 days) are not days of rental use. 2011 irs forms The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. 2011 irs forms You used the cottage for personal purposes for 14 days (the last 2 weeks in May). 2011 irs forms The total use of the cottage was 99 days (14 days personal use + 85 days rental use). 2011 irs forms Your rental expenses are 85/99 (86%) of the cottage expenses. 2011 irs forms Note. 2011 irs forms When determining whether you used the cottage as a home, the July weekend (2 days) you used it is considered personal use even though you received a fair rental price for the weekend. 2011 irs forms Therefore, you had 16 days of personal use and 83 days of rental use for this purpose. 2011 irs forms Because you used the cottage for personal purposes more than 14 days and more than 10% of the days of rental use (8 days), you used it as a home. 2011 irs forms If you have a net loss, you may not be able to deduct all of the rental expenses. 2011 irs forms See Dwelling Unit Used as a Home, next. 2011 irs forms Dwelling Unit Used as a Home If you use a dwelling unit for both rental and personal purposes, the tax treatment of the rental expenses you figured earlier under Dividing Expenses and rental income depends on whether you are considered to be using the dwelling unit as a home. 2011 irs forms You use a dwelling unit as a home during the tax year if you use it for personal purposes more than the greater of: 14 days, or 10% of the total days it is rented to others at a fair rental price. 2011 irs forms See What is a day of personal use , later. 2011 irs forms If a dwelling unit is used for personal purposes on a day it is rented at a fair rental price (discussed earlier), do not count that day as a day of rental use in applying (2) above. 2011 irs forms Instead, count it as a day of personal use in applying both (1) and (2) above. 2011 irs forms What is a day of personal use?   A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons. 2011 irs forms You or any other person who owns an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). 2011 irs forms However, see Days used as a main home before or after renting , later. 2011 irs forms A member of your family or a member of the family of any other person who owns an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. 2011 irs forms Family includes only your spouse, brothers and sisters, half-brothers and half-sisters, ancestors (parents, grandparents, etc. 2011 irs forms ), and lineal descendants (children, grandchildren, etc. 2011 irs forms ). 2011 irs forms Anyone under an arrangement that lets you use some other dwelling unit. 2011 irs forms Anyone at less than a fair rental price. 2011 irs forms Main home. 2011 irs forms   If the other person or member of the family in (1) or (2) above has more than one home, his or her main home is ordinarily the one he or she lived in most of the time. 2011 irs forms Shared equity financing agreement. 2011 irs forms   This is an agreement under which two or more persons acquire undivided interests for more than 50 years in an entire dwelling unit, including the land, and one or more of the co-owners is entitled to occupy the unit as his or her main home upon payment of rent to the other co-owner or owners. 2011 irs forms Donation of use of the property. 2011 irs forms   You use a dwelling unit for personal purposes if: You donate the use of the unit to a charitable organization, The organization sells the use of the unit at a fund-raising event, and The “purchaser” uses the unit. 2011 irs forms Examples. 2011 irs forms   The following examples show how to determine if you have days of personal use. 2011 irs forms Example 1. 2011 irs forms You and your neighbor are co-owners of a condominium at the beach. 2011 irs forms Last year, you rented the unit to vacationers whenever possible. 2011 irs forms The unit was not used as a main home by anyone. 2011 irs forms Your neighbor used the unit for 2 weeks last year; you did not use it at all. 2011 irs forms Because your neighbor has an interest in the unit, both of you are considered to have used the unit for personal purposes during those 2 weeks. 2011 irs forms Example 2. 2011 irs forms You and your neighbors are co-owners of a house under a shared equity financing agreement. 2011 irs forms Your neighbors live in the house and pay you a fair rental price. 2011 irs forms Even though your neighbors have an interest in the house, the days your neighbors live there are not counted as days of personal use by you. 2011 irs forms This is because your neighbors rent the house as their main home under a shared equity financing agreement. 2011 irs forms Example 3. 2011 irs forms You own a rental property that you rent to your son. 2011 irs forms Your son does not own any interest in this property. 2011 irs forms He uses it as his main home and pays you a fair rental price. 2011 irs forms Your son's use of the property is not personal use by you because your son is using it as his main home, he owns no interest in the property, and he is paying you a fair rental price. 2011 irs forms Example 4. 2011 irs forms You rent your beach house to Rosa. 2011 irs forms Rosa rents her cabin in the mountains to you. 2011 irs forms You each pay a fair rental price. 2011 irs forms You are using your beach house for personal purposes on the days that Rosa uses it because your house is used by Rosa under an arrangement that allows you to use her cabin. 2011 irs forms Example 5. 2011 irs forms You rent an apartment to your mother at less than a fair rental price. 2011 irs forms You are using the apartment for personal purposes on the days that your mother rents it because you rent it for less than a fair rental price. 2011 irs forms Days used for repairs and maintenance. 2011 irs forms   Any day that you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. 2011 irs forms Do not count such a day as a day of personal use even if family members use the property for recreational purposes on the same day. 2011 irs forms Example. 2011 irs forms Corey owns a cabin in the mountains that he rents for most of the year. 2011 irs forms He spends a week at the cabin with family members. 2011 irs forms Corey works on maintenance of the cabin 3 or 4 hours each day during the week and spends the rest of the time fishing, hiking, and relaxing. 2011 irs forms Corey's family members, however, work substantially full time on the cabin each day during the week. 2011 irs forms The main purpose of being at the cabin that week is to do maintenance work. 2011 irs forms Therefore, the use of the cabin during the week by Corey and his family will not be considered personal use by Corey. 2011 irs forms Days used as a main home before or after renting. 2011 irs forms   For purposes of determining whether a dwelling unit was used as a home, you may not have to count days you used the property as your main home before or after renting it or offering it for rent as days of personal use. 2011 irs forms Do not count them as days of personal use if: You rented or tried to rent the property for 12 or more consecutive months. 2011 irs forms You rented or tried to rent the property for a period of less than 12 consecutive months and the period ended because you sold or exchanged the property. 2011 irs forms However, this special rule does not apply when dividing expenses between rental and personal use. 2011 irs forms See Property Changed to Rental Use in chapter 4. 2011 irs forms Example 1. 2011 irs forms On February 29, 2012, you moved out of the house you had lived in for 6 years because you accepted a job in another town. 2011 irs forms You rented your house at a fair rental price from March 15, 2012, to May 14, 2013 (14 months). 2011 irs forms On June 1, 2013, you moved back into your old house. 2011 irs forms The days you used the house as your main home from January 1 to February 29, 2012, and from June 1 to December 31, 2013, are not counted as days of personal use. 2011 irs forms Therefore, you would use the rules in chapter 1 when figuring your rental income and expenses. 2011 irs forms Example 2. 2011 irs forms On January 31, you moved out of the condominium where you had lived for 3 years. 2011 irs forms You offered it for rent at a fair rental price beginning on February 1. 2011 irs forms You were unable to rent it until April. 2011 irs forms On September 15, you sold the condominium. 2011 irs forms The days you used the condominium as your main home from January 1 to January 31 are not counted as days of personal use when determining whether you used it as a home. 2011 irs forms Examples. 2011 irs forms   The following examples show how to determine whether you used your rental property as a home. 2011 irs forms Example 1. 2011 irs forms You converted the basement of your home into an apartment with a bedroom, a bathroom, and a small kitchen. 2011 irs forms You rented the basement apartment at a fair rental price to college students during the regular school year. 2011 irs forms You rented to them on a 9-month lease (273 days). 2011 irs forms You figured 10% of the total days rented to others at a fair rental price is 27 days. 2011 irs forms During June (30 days), your brothers stayed with you and lived in the basement apartment rent free. 2011 irs forms Your basement apartment was used as a home because you used it for personal purposes for 30 days. 2011 irs forms Rent-free use by your brothers is considered personal use. 2011 irs forms Your personal use (30 days) is more than the greater of 14 days or 10% of the total days it was rented (27 days). 2011 irs forms Example 2. 2011 irs forms You rented the guest bedroom in your home at a fair rental price during the local college's homecoming, commencement, and football weekends (a total of 27 days). 2011 irs forms Your sister-in-law stayed in the room, rent free, for the last 3 weeks (21 days) in July. 2011 irs forms You figured 10% of the total days rented to others at a fair rental price is 3 days. 2011 irs forms The room was used as a home because you used it for personal purposes for 21 days. 2011 irs forms That is more than the greater of 14 days or 10% of the 27 days it was rented (3 days). 2011 irs forms Example 3. 2011 irs forms You own a condominium apartment in a resort area. 2011 irs forms You rented it at a fair rental price for a total of 170 days during the year. 2011 irs forms For 12 of these days, the tenant was not able to use the apartment and allowed you to use it even though you did not refund any of the rent. 2011 irs forms Your family actually used the apartment for 10 of those days. 2011 irs forms Therefore, the apartment is treated as having been rented for 160 (170 – 10) days. 2011 irs forms You figured 10% of the total days rented to others at a fair rental price is 16 days. 2011 irs forms Your family also used the apartment for 7 other days during the year. 2011 irs forms You used the apartment as a home because you used it for personal purposes for 17 days. 2011 irs forms That is more than the greater of 14 days or 10% of the 160 days it was rented (16 days). 2011 irs forms Minimal rental use. 2011 irs forms   If you use the dwelling unit as a home and you rent it less than 15 days during the year, that period is not treated as rental activity. 2011 irs forms See Used as a home but rented less than 15 days, later, for more information. 2011 irs forms Limit on deductions. 2011 irs forms   Renting a dwelling unit that is considered a home is not a passive activity. 2011 irs forms Instead, if your rental expenses are more than your rental income, some or all of the excess expenses cannot be used to offset income from other sources. 2011 irs forms The excess expenses that cannot be used to offset income from other sources are carried forward to the next year and treated as rental expenses for the same property. 2011 irs forms Any expenses carried forward to the next year will be subject to any limits that apply for that year. 2011 irs forms This limitation will apply to expenses carried forward to another year even if you do not use the property as your home for that subsequent year. 2011 irs forms   To figure your deductible rental expenses for this year and any carryover to next year, use Worksheet 5–1. 2011 irs forms Reporting Income and Deductions Property not used for personal purposes. 2011 irs forms   If you do not use a dwelling unit for personal purposes, see chapter 3 for how to report your rental income and expenses. 2011 irs forms Property used for personal purposes. 2011 irs forms   If you do use a dwelling unit for personal purposes, then how you report your rental income and expenses depends on whether you used the dwelling unit as a home. 2011 irs forms Not used as a home. 2011 irs forms   If you use a dwelling unit for personal purposes, but not as a home, report all the rental income in your income. 2011 irs forms Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in this chapter under Dividing Expenses . 2011 irs forms The expenses for personal use are not deductible as rental expenses. 2011 irs forms   Your deductible rental expenses can be more than your gross rental income; however, see Limits on Rental Losses in chapter 3. 2011 irs forms Used as a home but rented less than 15 days. 2011 irs forms   If you use a dwelling unit as a home and you rent it less than 15 days during the year, its primary function is not considered to be rental and it should not be reported on Schedule E (Form 1040). 2011 irs forms You are not required to report the rental income and rental expenses from this activity. 2011 irs forms The expenses, including qualified mortgage interest, property taxes, and any qualified casualty loss will be reported as normally allowed on Schedule A (Form 1040). 2011 irs forms See the Instructions for Schedule A (Form 1040) for more information on deducting these expenses. 2011 irs forms Used as a home and rented 15 days or more. 2011 irs forms   If you use a dwelling unit as a home and rent it 15 days or more during the year, include all your rental income in your income. 2011 irs forms Since you used the dwelling unit for personal purposes, you must divide your expenses between the rental use and the personal use as described earlier in this chapter under Dividing Expenses . 2011 irs forms The expenses for personal use are not deductible as rental expenses. 2011 irs forms   If you had a net profit from renting the dwelling unit for the year (that is, if your rental income is more than the total of your rental expenses, including depreciation), deduct all of your rental expenses. 2011 irs forms You do not need to use Worksheet 5-1. 2011 irs forms   However, if you had a net loss from renting the dwelling unit for the year, your deduction for certain rental expenses is limited. 2011 irs forms To figure your deductible rental expenses and any carryover to next year, use Worksheet 5–1. 2011 irs forms Worksheet 5-1. 2011 irs forms Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Use this worksheet only if you answer “yes” to all of the following questions. 2011 irs forms Did you use the dwelling unit as a home this year? (See Dwelling Unit Used as a Home . 2011 irs forms ) Did you rent the dwelling unit at a fair rental price 15 days or more this year? Is the total of your rental expenses and depreciation more than your rental income? PART I. 2011 irs forms Rental Use Percentage A. 2011 irs forms Total days available for rent at fair rental price A. 2011 irs forms       B. 2011 irs forms Total days available for rent (line A) but not rented B. 2011 irs forms       C. 2011 irs forms Total days of rental use. 2011 irs forms Subtract line B from line A C. 2011 irs forms       D. 2011 irs forms Total days of personal use (including days rented at less than fair rental price) D. 2011 irs forms       E. 2011 irs forms Total days of rental and personal use. 2011 irs forms Add lines C and D E. 2011 irs forms       F. 2011 irs forms Percentage of expenses allowed for rental. 2011 irs forms Divide line C by line E     F. 2011 irs forms . 2011 irs forms PART II. 2011 irs forms Allowable Rental Expenses 1. 2011 irs forms Enter rents received 1. 2011 irs forms   2a. 2011 irs forms Enter the rental portion of deductible home mortgage interest and qualified mortgage insurance premiums (see instructions) 2a. 2011 irs forms       b. 2011 irs forms Enter the rental portion of real estate taxes b. 2011 irs forms       c. 2011 irs forms Enter the rental portion of deductible casualty and theft losses (see instructions) c. 2011 irs forms       d. 2011 irs forms Enter direct rental expenses (see instructions) d. 2011 irs forms       e. 2011 irs forms Fully deductible rental expenses. 2011 irs forms Add lines 2a–2d. 2011 irs forms Enter here and  on the appropriate lines on Schedule E (see instructions) 2e. 2011 irs forms   3. 2011 irs forms Subtract line 2e from line 1. 2011 irs forms If zero or less, enter -0- 3. 2011 irs forms   4a. 2011 irs forms Enter the rental portion of expenses directly related to operating or maintaining  the dwelling unit (such as repairs, insurance, and utilities) 4a. 2011 irs forms       b. 2011 irs forms Enter the rental portion of excess mortgage interest and qualified mortgage insurance premiums (see instructions) b. 2011 irs forms       c. 2011 irs forms Carryover of operating expenses from 2012 worksheet c. 2011 irs forms       d. 2011 irs forms Add lines 4a–4c d. 2011 irs forms       e. 2011 irs forms Allowable expenses. 2011 irs forms Enter the smaller of line 3 or line 4d (see instructions) 4e. 2011 irs forms   5. 2011 irs forms Subtract line 4e from line 3. 2011 irs forms If zero or less, enter -0- 5. 2011 irs forms   6a. 2011 irs forms Enter the rental portion of excess casualty and theft losses (see instructions) 6a. 2011 irs forms       b. 2011 irs forms Enter the rental portion of depreciation of the dwelling unit b. 2011 irs forms       c. 2011 irs forms Carryover of excess casualty losses and depreciation from 2012 worksheet c. 2011 irs forms       d. 2011 irs forms Add lines 6a–6c d. 2011 irs forms       e. 2011 irs forms Allowable excess casualty and theft losses and depreciation. 2011 irs forms Enter the smaller of  line 5 or line 6d (see instructions) 6e. 2011 irs forms   PART III. 2011 irs forms Carryover of Unallowed Expenses to Next Year 7a. 2011 irs forms Operating expenses to be carried over to next year. 2011 irs forms Subtract line 4e from line 4d 7a. 2011 irs forms   b. 2011 irs forms Excess casualty and theft losses and depreciation to be carried over to next year. 2011 irs forms  Subtract line 6e from line 6d b. 2011 irs forms   Worksheet 5-1 Instructions. 2011 irs forms Worksheet for Figuring Rental Deductions for a Dwelling Unit Used as a Home Caution. 2011 irs forms Use the percentage determined in Part I, line F, to figure the rental portions to enter on lines 2a–2c, 4a–4b, and 6a–6b of  Part II. 2011 irs forms Line 2a. 2011 irs forms Figure the mortgage interest on the dwelling unit that you could deduct on Schedule A as if you had not rented the unit. 2011 irs forms Do not include interest on a loan that did not benefit the dwelling unit. 2011 irs forms For example, do not include interest on a home equity loan used to pay off credit cards or other personal loans, buy a car, or pay college tuition. 2011 irs forms Include interest on a loan used to buy, build, or improve the dwelling unit, or to refinance such a loan. 2011 irs forms Include the rental portion of this interest in the total you enter on line 2a of the worksheet. 2011 irs forms   Figure the qualified mortgage insurance premiums on the dwelling unit that you could deduct on line 13 of Schedule A as if you had not rented the unit. 2011 irs forms See the Schedule A instructions. 2011 irs forms However, figure your adjusted gross income (Form 1040, line 38) without your rental income and expenses from the dwelling unit. 2011 irs forms See Line 4b to deduct the part of the qualified mortgage insurance premiums not allowed because of the adjusted gross income limit. 2011 irs forms Include the rental portion of the amount from Schedule A, line 13, in the total you enter on line 2a of the worksheet. 2011 irs forms   Note. 2011 irs forms Do not file this Schedule A or use it to figure the amount to deduct on line 13 of that schedule. 2011 irs forms Instead, figure the personal portion on a separate Schedule A. 2011 irs forms If you have deducted mortgage interest or qualified mortgage insurance premiums on the dwelling unit on other forms, such as Schedule C or F, remember to reduce your Schedule A deduction by that amount. 2011 irs forms           Line 2c. 2011 irs forms Figure the casualty and theft losses related to the dwelling unit that you could deduct on Schedule A as if you had not rented the dwelling unit. 2011 irs forms To do this, complete Section A of Form 4684, Casualties and Thefts, treating the losses as personal losses. 2011 irs forms If any of the loss is due to a federally declared disaster, see the Instructions for Form 4684. 2011 irs forms On Form 4684, line 17, enter 10% of your adjusted gross income figured without your rental income and expenses from the dwelling unit. 2011 irs forms Enter the rental portion of the result from Form 4684, line 18, on line 2c of this worksheet. 2011 irs forms   Note. 2011 irs forms Do not file this Form 4684 or use it to figure your personal losses on Schedule A. 2011 irs forms Instead, figure the personal portion on a separate Form 4684. 2011 irs forms           Line 2d. 2011 irs forms Enter the total of your rental expenses that are directly related only to the rental activity. 2011 irs forms These include interest on loans used for rental activities other than to buy, build, or improve the dwelling unit. 2011 irs forms Also include rental agency fees, advertising, office supplies, and depreciation on office equipment used in your rental activity. 2011 irs forms           Line 2e. 2011 irs forms You can deduct the amounts on lines 2a, 2b, 2c, and 2d as rental expenses on Schedule E even if your rental expenses are more than your rental income. 2011 irs forms Enter the amounts on lines 2a, 2b, 2c, and 2d on the appropriate lines of Schedule E. 2011 irs forms           Line 4b. 2011 irs forms On line 2a, you entered the rental portion of the mortgage interest or qualified mortgage insurance premiums you could deduct on Schedule A if you had not rented the dwelling unit. 2011 irs forms If you had additional mortgage interest and qualified mortgage insurance premiums that would not be deductible on Schedule A because of limits imposed on them, enter on line 4b of this worksheet the rental portion of those excess amounts. 2011 irs forms Do not include interest on a loan that did not benefit the dwelling unit  (as explained in the line 2a instructions). 2011 irs forms           Line 4e. 2011 irs forms You can deduct the amounts on lines 4a, 4b, and 4c as rental expenses on Schedule E only to the extent they are not more than the amount on line 4e. 2011 irs forms *           Line 6a. 2011 irs forms To find the rental portion of excess casualty and theft losses, use the Form 4684 you prepared for line 2c of this worksheet. 2011 irs forms   A. 2011 irs forms Enter the amount from Form 4684, line 10       B. 2011 irs forms Enter the rental portion of line A       C. 2011 irs forms Enter the amount from line 2c of this worksheet       D. 2011 irs forms Subtract line C from line B. 2011 irs forms Enter the result here and on line 6a of this worksheet               Line 6e. 2011 irs forms You can deduct the amounts on lines 6a, 6b, and 6c as rental expenses on Schedule E only to the extent they are not more than the amount on line 6e. 2011 irs forms * *Allocating the limited deduction. 2011 irs forms If you cannot deduct all of the amount on line 4d or 6d this year, you can allocate the allowable deduction in any way you wish among the expenses included on line 4d or 6d. 2011 irs forms Enter the amount you allocate to each expense on the appropriate line of Schedule E, Part I. 2011 irs forms Prev  Up  Next   Home   More Online Publications
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The 2011 Irs Forms

2011 irs forms 25. 2011 irs forms   Nonbusiness Casualty and Theft Losses Table of Contents What's New Introduction Useful Items - You may want to see: CasualtyFamily pet. 2011 irs forms Progressive deterioration. 2011 irs forms Damage from corrosive drywall. 2011 irs forms Theft Loss on Deposits Proof of Loss Figuring a LossDecrease in Fair Market Value Adjusted Basis Insurance and Other Reimbursements Single Casualty on Multiple Properties Deduction Limits$100 Rule 10% Rule When To Report Gains and LossesDisaster Area Loss How To Report Gains and Losses What's New New Section C of Form 4684 for Ponzi-type investment schemes. 2011 irs forms  Section C of Form 4684 is new for 2013. 2011 irs forms You must complete Section C if you are claiming a theft loss deduction due to a Ponzi-type investment scheme and are using Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58. 2011 irs forms Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. 2011 irs forms You do not need to complete Appendix A. 2011 irs forms For details, see Losses from Ponzi-type investment schemes , in this chapter. 2011 irs forms Introduction This chapter explains the tax treatment of personal (not business or investment related) casualty losses, theft losses, and losses on deposits. 2011 irs forms The chapter also explains the following  topics. 2011 irs forms How to figure the amount of your loss. 2011 irs forms How to treat insurance and other reimbursements you receive. 2011 irs forms The deduction limits. 2011 irs forms When and how to report a casualty or theft. 2011 irs forms Forms to file. 2011 irs forms    When you have a casualty or theft, you have to file Form 4684. 2011 irs forms You will also have to file one or more of the following forms. 2011 irs forms Schedule A (Form 1040), Itemized Deductions Schedule D (Form 1040), Capital Gains and Losses Condemnations. 2011 irs forms   For information on condemnations of property, see Involuntary Conversions in chapter 1 of Publication 544, Sales and Other Disposition of Assets. 2011 irs forms Workbook for casualties and thefts. 2011 irs forms    Publication 584 is available to help you make a list of your stolen or damaged personal-use property and figure your loss. 2011 irs forms It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. 2011 irs forms Business or investment-related losses. 2011 irs forms   For information on a casualty or theft loss of business or income-producing property, see Publication 547, Casualties, Disasters, and Thefts. 2011 irs forms Useful Items - You may want to see: Publication 544 Sales and Other Dispositions  of Assets 547 Casualties, Disasters, and   Thefts 584 Casualty, Disaster, and Theft   Loss Workbook (Personal-Use  Property) Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule D (Form 1040) Capital Gains and Losses 4684 Casualties and Thefts Casualty A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. 2011 irs forms A sudden event is one that is swift, not gradual or progressive. 2011 irs forms An unexpected event is one that is ordinarily unanticipated and unintended. 2011 irs forms 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. 2011 irs forms Deductible losses. 2011 irs forms   Deductible casualty losses can result from a number of different causes, including the following. 2011 irs forms Car accidents (but see Nondeductible losses , next, for exceptions). 2011 irs forms Earthquakes. 2011 irs forms Fires (but see Nondeductible losses , next, for exceptions). 2011 irs forms Floods. 2011 irs forms 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. 2011 irs forms Mine cave-ins. 2011 irs forms Shipwrecks. 2011 irs forms Sonic booms. 2011 irs forms Storms, including hurricanes and tornadoes. 2011 irs forms Terrorist attacks. 2011 irs forms Vandalism. 2011 irs forms Volcanic eruptions. 2011 irs forms Nondeductible losses. 2011 irs forms   A casualty loss is not deductible if the damage or destruction is caused by the following. 2011 irs forms Accidentally breaking articles such as glassware or china under normal conditions. 2011 irs forms A family pet (explained below). 2011 irs forms A fire if you willfully set it or pay someone else to set it. 2011 irs forms A car accident if your willful negligence or willful act caused it. 2011 irs forms The same is true if the willful act or willful negligence of someone acting for you caused the accident. 2011 irs forms Progressive deterioration (explained later). 2011 irs forms Family pet. 2011 irs forms   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed earlier under Casualty are met. 2011 irs forms Example. 2011 irs forms Your antique oriental rug was damaged by your new puppy before it was housebroken. 2011 irs forms Because the damage was not unexpected and unusual, the loss is not deductible as a casualty loss. 2011 irs forms Progressive deterioration. 2011 irs forms    Loss of property due to progressive deterioration is not deductible as a casualty loss. 2011 irs forms This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. 2011 irs forms The following are examples of damage due to progressive deterioration. 2011 irs forms The steady weakening of a building due to normal wind and weather conditions. 2011 irs forms The deterioration and damage to a water heater that bursts. 2011 irs forms However, the rust and water damage to rugs and drapes caused by the bursting of a water heater does qualify as a casualty. 2011 irs forms Most losses of property caused by droughts. 2011 irs forms To be deductible, a drought-related loss generally must be incurred in a trade or business or in a transaction entered into for profit. 2011 irs forms Termite or moth damage. 2011 irs forms The damage or destruction of trees, shrubs, or other plants by a fungus, disease, insects, worms, or similar pests. 2011 irs forms However, a sudden destruction due to an unexpected or unusual infestation of beetles or other insects may result in a casualty loss. 2011 irs forms Damage from corrosive drywall. 2011 irs forms   Under a special procedure, you may be able to claim a casualty loss deduction for amounts you paid to repair damage to your home and household appliances that resulted from corrosive drywall. 2011 irs forms For details, see Publication 547. 2011 irs forms Theft A theft is the taking and removing of money or property with the intent to deprive the owner of it. 2011 irs forms The taking of property must be illegal under the laws of the state where it occurred and it must have been done with criminal intent. 2011 irs forms You do not need to show a conviction for theft. 2011 irs forms Theft includes the taking of money or property by the following means. 2011 irs forms Blackmail. 2011 irs forms Burglary. 2011 irs forms Embezzlement. 2011 irs forms Extortion. 2011 irs forms Kidnapping for ransom. 2011 irs forms Larceny. 2011 irs forms Robbery. 2011 irs forms The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. 2011 irs forms Decline in market value of stock. 2011 irs forms   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. 2011 irs forms 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. 2011 irs forms You report a capital loss on Schedule D (Form 1040). 2011 irs forms For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. 2011 irs forms Mislaid or lost property. 2011 irs forms   The simple disappearance of money or property is not a theft. 2011 irs forms 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. 2011 irs forms Sudden, unexpected, and unusual events are defined earlier. 2011 irs forms Example. 2011 irs forms A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. 2011 irs forms The diamond falls from the ring and is never found. 2011 irs forms The loss of the diamond is a casualty. 2011 irs forms Losses from Ponzi-type investment schemes. 2011 irs forms   If you had a loss from a Ponzi-type investment scheme, see: Revenue Ruling 2009-9, 2009-14 I. 2011 irs forms R. 2011 irs forms B. 2011 irs forms 735 (available at www. 2011 irs forms irs. 2011 irs forms gov/irb/2009-14_IRB/ar07. 2011 irs forms html). 2011 irs forms Revenue Procedure 2009-20, 2009-14 I. 2011 irs forms R. 2011 irs forms B. 2011 irs forms 749 (available at www. 2011 irs forms irs. 2011 irs forms gov/irb/2009-14_IRB/ar11. 2011 irs forms html). 2011 irs forms Revenue Procedure 2011-58, 2011-50 I. 2011 irs forms R. 2011 irs forms B. 2011 irs forms 849 (available at www. 2011 irs forms irs. 2011 irs forms gov/irb/2011-50_IRB/ar11. 2011 irs forms html). 2011 irs forms If you qualify to use Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58, and you choose to follow the procedures in the guidance, first fill out Section C of Form 4684 to determine the amount to enter on Section B, line 28. 2011 irs forms Skip lines 19 to 27. 2011 irs forms Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. 2011 irs forms You do not need to complete Appendix A. 2011 irs forms For more information, see the above revenue ruling and revenue procedures, and the Instructions for Form 4684. 2011 irs forms   If you choose not to use the procedures in Revenue Procedure 2009-20, you may claim your theft loss by filling out Section B, lines 19 to 39, as appropriate. 2011 irs forms Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. 2011 irs forms If you incurred this type of loss, you can choose one of the following ways to deduct the loss. 2011 irs forms As a casualty loss. 2011 irs forms As an ordinary loss. 2011 irs forms As a nonbusiness bad debt. 2011 irs forms Casualty loss or ordinary loss. 2011 irs forms   You can choose to deduct a loss on deposits as a casualty loss or as an ordinary loss for any year in which you can reasonably estimate how much of your deposits you have lost in an insolvent or bankrupt financial institution. 2011 irs forms The choice is generally made on the return you file for that year and applies to all your losses on deposits for the year in that particular financial institution. 2011 irs forms If you treat the loss as a casualty or ordinary loss, you cannot treat the same amount of the loss as a nonbusiness bad debt when it actually becomes worthless. 2011 irs forms However, you can take a nonbusiness bad debt deduction for any amount of loss that is more than the estimated amount you deducted as a casualty or ordinary loss. 2011 irs forms Once you make this choice, you cannot change it without permission from the Internal Revenue Service. 2011 irs forms   If you claim an ordinary loss, report it as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. 2011 irs forms The maximum amount you can claim is $20,000 ($10,000 if you are married filing separately) reduced by any expected state insurance proceeds. 2011 irs forms Your loss is subject to the 2%-of-adjusted-gross-income limit. 2011 irs forms You cannot choose to claim an ordinary loss if any part of the deposit is federally insured. 2011 irs forms Nonbusiness bad debt. 2011 irs forms   If you do not choose to deduct the loss as a casualty loss or as an ordinary loss, you must wait until the year the actual loss is determined and deduct the loss as a nonbusiness bad debt in that year. 2011 irs forms How to report. 2011 irs forms   The kind of deduction you choose for your loss on deposits determines how you report your loss. 2011 irs forms If you choose: Casualty loss — report it on Form 4684 first and then on Schedule A (Form 1040). 2011 irs forms Ordinary loss — report it on Schedule A (Form 1040) as a miscellaneous itemized deduction. 2011 irs forms Nonbusiness bad debt — report it on Form 8949 first and then on Schedule D (Form 1040). 2011 irs forms More information. 2011 irs forms   For more information, see Special Treatment for Losses on Deposits in Insolvent or Bankrupt Financial Institutions in the Instructions for Form 4684 or Deposit in Insolvent or Bankrupt Financial Institution in Publication 550. 2011 irs forms Proof of Loss To deduct a casualty or theft loss, you must be able to prove that you had a casualty or theft. 2011 irs forms You also must be able to support the amount you take as a deduction. 2011 irs forms Casualty loss proof. 2011 irs forms   For a casualty loss, your records should show all the following. 2011 irs forms The type of casualty (car accident, fire, storm, etc. 2011 irs forms ) and when it occurred. 2011 irs forms That the loss was a direct result of the casualty. 2011 irs forms 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. 2011 irs forms Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. 2011 irs forms Theft loss proof. 2011 irs forms   For a theft loss, your records should show all the following. 2011 irs forms When you discovered that your property was missing. 2011 irs forms That your property was stolen. 2011 irs forms That you were the owner of the property. 2011 irs forms Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. 2011 irs forms It is important that you have records that will prove your deduction. 2011 irs forms If you do not have the actual records to support your deduction, you can use other satisfactory evidence to support it. 2011 irs forms Figuring a Loss Figure the amount of your loss using the following steps. 2011 irs forms Determine your adjusted basis in the property before the casualty or theft. 2011 irs forms Determine the decrease in fair market value of the property as a result of the casualty or theft. 2011 irs forms From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you received or expect to receive. 2011 irs forms For personal-use property and property used in performing services as an employee, apply the deduction limits, discussed later, to determine the amount of your deductible loss. 2011 irs forms Gain from reimbursement. 2011 irs forms   If your reimbursement is more than your adjusted basis in the property, you have a gain. 2011 irs forms This is true even if the decrease in the FMV of the property is smaller than your adjusted basis. 2011 irs forms If you have a gain, you may have to pay tax on it, or you may be able to postpone reporting the gain. 2011 irs forms See Publication 547 for more information on how to treat a gain from a reimbursement for a casualty or theft. 2011 irs forms Leased property. 2011 irs forms   If you are liable for casualty damage to property you lease, your loss is the amount you must pay to repair the property minus any insurance or other reimbursement you receive or expect to receive. 2011 irs forms Decrease in Fair Market Value Fair market value (FMV) is the price for which you could sell your property to a willing buyer when neither of you has to sell or buy and both of you know all the relevant facts. 2011 irs forms The decrease in FMV used to figure the amount of a casualty or theft loss is the difference between the property's fair market value immediately before and immediately after the casualty or theft. 2011 irs forms FMV of stolen property. 2011 irs forms   The FMV of property immediately after a theft is considered to be zero, since you no longer have the property. 2011 irs forms Example. 2011 irs forms Several years ago, you purchased silver dollars at face value for $150. 2011 irs forms This is your adjusted basis in the property. 2011 irs forms Your silver dollars were stolen this year. 2011 irs forms The FMV of the coins was $1,000 just before they were stolen, and insurance did not cover them. 2011 irs forms Your theft loss is $150. 2011 irs forms Recovered stolen property. 2011 irs forms   Recovered stolen property is your property that was stolen and later returned to you. 2011 irs forms If you recovered property after you had already taken a theft loss deduction, you must refigure your loss using the smaller of the property's adjusted basis (explained later) or the decrease in FMV from the time just before it was stolen until the time it was recovered. 2011 irs forms Use this amount to refigure your total loss for the year in which the loss was deducted. 2011 irs forms   If your refigured loss is less than the loss you deducted, you generally have to report the difference as income in the recovery year. 2011 irs forms But report the difference only up to the amount of the loss that reduced your tax. 2011 irs forms For more information on the amount to report, see Recoveries in chapter 12. 2011 irs forms Figuring Decrease in FMV— Items To Consider To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. 2011 irs forms However, other measures can also be used to establish certain decreases. 2011 irs forms Appraisal. 2011 irs forms   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. 2011 irs forms The appraiser must recognize the effects of any general market decline that may occur along with the casualty. 2011 irs forms This information is needed to limit any deduction to the actual loss resulting from damage to the property. 2011 irs forms   Several factors are important in evaluating the accuracy of an appraisal, including the following. 2011 irs forms The appraiser's familiarity with your property before and after the casualty or theft. 2011 irs forms The appraiser's knowledge of sales of comparable property in the area. 2011 irs forms The appraiser's knowledge of conditions in the area of the casualty. 2011 irs forms The appraiser's method of appraisal. 2011 irs forms    You may be able to use an appraisal that you used to get a federal loan (or a federal loan guarantee) as the result of a federally declared disaster to establish the amount of your disaster loss. 2011 irs forms For more information on disasters, see Disaster Area Losses, in Pub. 2011 irs forms 547. 2011 irs forms Cost of cleaning up or making repairs. 2011 irs forms   The cost of repairing damaged property is not part of a casualty loss. 2011 irs forms Neither is the cost of cleaning up after a casualty. 2011 irs forms 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. 2011 irs forms The repairs are actually made. 2011 irs forms The repairs are necessary to bring the property back to its condition before the casualty. 2011 irs forms The amount spent for repairs is not excessive. 2011 irs forms The repairs take care of the damage only. 2011 irs forms The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. 2011 irs forms Landscaping. 2011 irs forms   The cost of restoring landscaping to its original condition after a casualty may indicate the decrease in FMV. 2011 irs forms You may be able to measure your loss by what you spend on the following. 2011 irs forms Removing destroyed or damaged trees and shrubs minus any salvage you receive. 2011 irs forms Pruning and other measures taken to preserve damaged trees and shrubs. 2011 irs forms Replanting necessary to restore the property to its approximate value before the casualty. 2011 irs forms Car value. 2011 irs forms    Books issued by various automobile organizations that list your car may be useful in figuring the value of your car. 2011 irs forms You can use the book's retail values and modify them by such factors as mileage and the condition of your car to figure its value. 2011 irs forms The prices are not official, but they may be useful in determining value and suggesting relative prices for comparison with current sales and offerings in your area. 2011 irs forms If your car is not listed in the books, determine its value from other sources. 2011 irs forms A dealer's offer for your car as a trade-in on a new car is not usually a measure of its true value. 2011 irs forms Figuring Decrease in FMV— Items Not To Consider You generally should not consider the following items when attempting to establish the decrease in FMV of your property. 2011 irs forms Cost of protection. 2011 irs forms   The cost of protecting your property against a casualty or theft is not part of a casualty or theft loss. 2011 irs forms The amount you spend on insurance or to board up your house against a storm is not part of your loss. 2011 irs forms   If you make permanent improvements to your property to protect it against a casualty or theft, add the cost of these improvements to your basis in the property. 2011 irs forms An example would be the cost of a dike to prevent flooding. 2011 irs forms Exception. 2011 irs forms   You cannot increase your basis in the property by, or deduct as a business expense, any expenditures you made with respect to qualified disaster mitigation payments. 2011 irs forms See Disaster Area Losses in Publication 547. 2011 irs forms Incidental expenses. 2011 irs forms   Any incidental expenses you have due to a casualty or theft, such as expenses for the treatment of personal injuries, for temporary housing, or for a rental car, are not part of your casualty or theft loss. 2011 irs forms Replacement cost. 2011 irs forms   The cost of replacing stolen or destroyed property is not part of a casualty or theft loss. 2011 irs forms Sentimental value. 2011 irs forms   Do not consider sentimental value when determining your loss. 2011 irs forms If a family portrait, heirloom, or keepsake is damaged, destroyed, or stolen, you must base your loss on its FMV, as limited by your adjusted basis in the property. 2011 irs forms Decline in market value of property in or near casualty area. 2011 irs forms   A decrease in the value of your property because it is in or near an area that suffered a casualty, or that might again suffer a casualty, is not to be taken into consideration. 2011 irs forms You have a loss only for actual casualty damage to your property. 2011 irs forms However, if your home is in a federally declared disaster area, see Disaster Area Losses in Publication 547. 2011 irs forms Costs of photographs and appraisals. 2011 irs forms    Photographs taken after a casualty will be helpful in establishing the condition and value of the property after it was damaged. 2011 irs forms Photographs showing the condition of the property after it was repaired, restored, or replaced may also be helpful. 2011 irs forms    Appraisals are used to figure the decrease in FMV because of a casualty or theft. 2011 irs forms See Appraisal , earlier, under Figuring Decrease in FMV — Items To Consider, for information about appraisals. 2011 irs forms   The costs of photographs and appraisals used as evidence of the value and condition of property damaged as a result of a casualty are not a part of the loss. 2011 irs forms You can claim these costs as a miscellaneous itemized deduction subject to the 2%-of-adjusted-gross-income limit on Schedule A (Form 1040). 2011 irs forms For information about miscellaneous deductions, see chapter 28. 2011 irs forms Adjusted Basis Adjusted basis is your basis in the property (usually cost) increased or decreased by various events, such as improvements and casualty losses. 2011 irs forms For more information, see chapter 13. 2011 irs forms Insurance and Other Reimbursements If you receive an insurance payment or other type of reimbursement, you must subtract the reimbursement when you figure your loss. 2011 irs forms You do not have a casualty or theft loss to the extent you are reimbursed. 2011 irs forms If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. 2011 irs forms You must reduce your loss even if you do not receive payment until a later tax year. 2011 irs forms See Reimbursement Received After Deducting Loss , later. 2011 irs forms Failure to file a claim for reimbursement. 2011 irs forms   If your property is covered by insurance, you must file a timely insurance claim for reimbursement of your loss. 2011 irs forms Otherwise, you cannot deduct this loss as a casualty or theft loss. 2011 irs forms However, this rule does not apply to the portion of the loss not covered by insurance (for example, a deductible). 2011 irs forms Example. 2011 irs forms You have a car insurance policy with a $1,000 deductible. 2011 irs forms Because your insurance did not cover the first $1,000 of an auto collision, the $1,000 would be deductible (subject to the deduction limits discussed later). 2011 irs forms This is true even if you do not file an insurance claim, because your insurance policy would never have reimbursed you for the deductible. 2011 irs forms Types of Reimbursements The most common type of reimbursement is an insurance payment for your stolen or damaged property. 2011 irs forms Other types of reimbursements are discussed next. 2011 irs forms Also see the Instructions for Form 4684. 2011 irs forms Employer's emergency disaster fund. 2011 irs forms   If you receive money from your employer's emergency disaster fund and you must use that money to rehabilitate or replace property on which you are claiming a casualty loss deduction, you must take that money into consideration in computing the casualty loss deduction. 2011 irs forms Take into consideration only the amount you used to replace your destroyed or damaged property. 2011 irs forms Example. 2011 irs forms Your home was extensively damaged by a tornado. 2011 irs forms Your loss after reimbursement from your insurance company was $10,000. 2011 irs forms Your employer set up a disaster relief fund for its employees. 2011 irs forms Employees receiving money from the fund had to use it to rehabilitate or replace their damaged or destroyed property. 2011 irs forms You received $4,000 from the fund and spent the entire amount on repairs to your home. 2011 irs forms In figuring your casualty loss, you must reduce your unreimbursed loss ($10,000) by the $4,000 you received from your employer's fund. 2011 irs forms Your casualty loss before applying the deduction limits discussed later is $6,000. 2011 irs forms Cash gifts. 2011 irs forms   If you receive excludable cash gifts as a disaster victim and there are no limits on how you can use the money, you do not reduce your casualty loss by these excludable cash gifts. 2011 irs forms This applies even if you use the money to pay for repairs to property damaged in the disaster. 2011 irs forms Example. 2011 irs forms Your home was damaged by a hurricane. 2011 irs forms Relatives and neighbors made cash gifts to you that were excludable from your income. 2011 irs forms You used part of the cash gifts to pay for repairs to your home. 2011 irs forms There were no limits or restrictions on how you could use the cash gifts. 2011 irs forms Because it was an excludable gift, the money you received and used to pay for repairs to your home does not reduce your casualty loss on the damaged home. 2011 irs forms Insurance payments for living expenses. 2011 irs forms   You do not reduce your casualty loss by insurance payments you receive to cover living expenses in either of the following situations. 2011 irs forms You lose the use of your main home because of a casualty. 2011 irs forms Government authorities do not allow you access to your main home because of a casualty or threat of one. 2011 irs forms Inclusion in income. 2011 irs forms   If these insurance payments are more than the temporary increase in your living expenses, you must include the excess in your income. 2011 irs forms Report this amount on Form 1040, line 21. 2011 irs forms However, if the casualty occurs in a federally declared disaster area, none of the insurance payments are taxable. 2011 irs forms See Qualified disaster relief payments, under Disaster Area Losses in Publication 547. 2011 irs forms   A temporary increase in your living expenses is the difference between the actual living expenses you and your family incurred during the period you could not use your home and your normal living expenses for that period. 2011 irs forms Actual living expenses are the reasonable and necessary expenses incurred because of the loss of your main home. 2011 irs forms Generally, these expenses include the amounts you pay for the following. 2011 irs forms Rent for suitable housing. 2011 irs forms Transportation. 2011 irs forms Food. 2011 irs forms Utilities. 2011 irs forms Miscellaneous services. 2011 irs forms Normal living expenses consist of these same expenses that you would have incurred but did not because of the casualty or the threat of one. 2011 irs forms Example. 2011 irs forms As a result of a fire, you vacated your apartment for a month and moved to a motel. 2011 irs forms You normally pay $525 a month for rent. 2011 irs forms None was charged for the month the apartment was vacated. 2011 irs forms Your motel rent for this month was $1,200. 2011 irs forms You normally pay $200 a month for food. 2011 irs forms Your food expenses for the month you lived in the motel were $400. 2011 irs forms You received $1,100 from your insurance company to cover your living expenses. 2011 irs forms You determine the payment you must include in income as follows. 2011 irs forms 1) Insurance payment for living expenses $1,100 2) Actual expenses during the month you are unable to use your home because of fire 1,600   3) Normal living expenses 725   4) Temporary increase in living  expenses: Subtract line 3 from line 2 875 5) Amount of payment includible  in income: Subtract line 4  from line 1 $ 225 Tax year of inclusion. 2011 irs forms   You include the taxable part of the insurance payment in income for the year you regain the use of your main home or, if later, for the year you receive the taxable part of the insurance payment. 2011 irs forms Example. 2011 irs forms Your main home was destroyed by a tornado in August 2011. 2011 irs forms You regained use of your home in November 2012. 2011 irs forms The insurance payments you received in 2011 and 2012 were $1,500 more than the temporary increase in your living expenses during those years. 2011 irs forms You include this amount in income on your 2012 Form 1040. 2011 irs forms If, in 2013, you receive further payments to cover the living expenses you had in 2011 and 2012, you must include those payments in income on your 2013 Form 1040. 2011 irs forms Disaster relief. 2011 irs forms   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. 2011 irs forms Qualified disaster relief payments you receive for expenses you incurred as a result of a federally declared disaster are not taxable income to you. 2011 irs forms For more information, see Disaster Area Losses in Publication 547. 2011 irs forms Disaster unemployment assistance payments are unemployment benefits that are taxable. 2011 irs forms Generally, disaster relief grants and qualified disaster mitigation payments made under the Robert T. 2011 irs forms Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) are not includible in your income. 2011 irs forms See Disaster Area Losses in Publication 547. 2011 irs forms Reimbursement Received After Deducting Loss If you figured your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you receive your actual reimbursement. 2011 irs forms This section explains the adjustment you may have to make. 2011 irs forms Actual reimbursement less than expected. 2011 irs forms   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. 2011 irs forms Example. 2011 irs forms Your personal car had an FMV of $2,000 when it was destroyed in a collision with another car in 2012. 2011 irs forms The accident was due to the negligence of the other driver. 2011 irs forms At the end of 2012, there was a reasonable prospect that the owner of the other car would reimburse you in full. 2011 irs forms You did not have a deductible loss in 2012. 2011 irs forms In January 2013, the court awarded you a judgment of $2,000. 2011 irs forms However, in July it became apparent that you will be unable to collect any amount from the other driver. 2011 irs forms You can deduct the loss in 2013 subject to the limits discussed later. 2011 irs forms Actual reimbursement more than expected. 2011 irs forms   If you later receive more reimbursement than you expected after you claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. 2011 irs forms However, if any part of the original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. 2011 irs forms You do not refigure your tax for the year you claimed the deduction. 2011 irs forms For more information, see Recoveries in chapter 12. 2011 irs forms 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. 2011 irs forms If you have already taken a deduction for a loss and you receive the reimbursement in a later year, you may have to include the gain in your income for the later year. 2011 irs forms Include the gain as ordinary income up to the amount of your deduction that reduced your tax for the earlier year. 2011 irs forms See Figuring a Gain in Publication 547 for more information on how to treat a gain from the reimbursement of a casualty or theft. 2011 irs forms Actual reimbursement same as expected. 2011 irs forms   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. 2011 irs forms Example. 2011 irs forms In December 2013, you had a collision while driving your personal car. 2011 irs forms Repairs to the car cost $950. 2011 irs forms You had $100 deductible collision insurance. 2011 irs forms Your insurance company agreed to reimburse you for the rest of the damage. 2011 irs forms Because you expected a reimbursement from the insurance company, you did not have a casualty loss deduction in 2013. 2011 irs forms Due to the $100 rule (discussed later under Deduction Limits ), you cannot deduct the $100 you paid as the deductible. 2011 irs forms When you receive the $850 from the insurance company in 2014, do not report it as income. 2011 irs forms Single Casualty on Multiple Properties Personal property. 2011 irs forms   Personal property is any property that is not real property. 2011 irs forms If your personal property is stolen or is damaged or destroyed by a casualty, you must figure your loss separately for each item of property. 2011 irs forms Then combine these separate losses to figure the total loss from that casualty or theft. 2011 irs forms Example. 2011 irs forms A fire in your home destroyed an upholstered chair, an oriental rug, and an antique table. 2011 irs forms You did not have fire insurance to cover your loss. 2011 irs forms (This was the only casualty or theft you had during the year. 2011 irs forms ) You paid $750 for the chair and you established that it had an FMV of $500 just before the fire. 2011 irs forms The rug cost $3,000 and had an FMV of $2,500 just before the fire. 2011 irs forms You bought the table at an auction for $100 before discovering it was an antique. 2011 irs forms It had been appraised at $900 before the fire. 2011 irs forms You figure your loss on each of these items as follows:     Chair Rug Table 1) Basis (cost) $750 $3,000 $100 2) FMV before fire $500 $2,500 $900 3) FMV after fire –0– –0– –0– 4) Decrease in FMV $500 $2,500 $900 5) Loss (smaller of (1) or  (4)) $500 $2,500 $100           6) Total loss     $3,100 Real property. 2011 irs forms   In figuring a casualty loss on personal-use real property, treat the entire property (including any improvements, such as buildings, trees, and shrubs) as one item. 2011 irs forms Figure the loss using the smaller of the adjusted basis or the decrease in FMV of the entire property. 2011 irs forms Example. 2011 irs forms You bought your home a few years ago. 2011 irs forms You paid $160,000 ($20,000 for the land and $140,000 for the house). 2011 irs forms You also spent $2,000 for landscaping. 2011 irs forms This year a fire destroyed your home. 2011 irs forms The fire also damaged the shrubbery and trees in your yard. 2011 irs forms The fire was your only casualty or theft loss this year. 2011 irs forms Competent appraisers valued the property as a whole at $200,000 before the fire, but only $30,000 after the fire. 2011 irs forms (The loss to your household furnishings is not shown in this example. 2011 irs forms It would be figured separately on each item, as explained earlier under Personal property . 2011 irs forms ) Shortly after the fire, the insurance company paid you $155,000 for the loss. 2011 irs forms You figure your casualty loss as follows: 1) Adjusted basis of the entire property (land, building, and landscaping) $162,000 2) FMV of entire property before fire $200,000 3) FMV of entire property after fire 30,000 4) Decrease in FMV of entire  property $170,000 5) Loss (smaller of (1) or (4)) $162,000 6) Subtract insurance 155,000 7) Amount of loss after reimbursement $7,000 Deduction Limits After you have figured your casualty or theft loss, you must figure how much of the loss you can deduct. 2011 irs forms If the loss was to property for your personal use or your family's use, there are two limits on the amount you can deduct for your casualty or theft loss. 2011 irs forms You must reduce each casualty or theft loss by $100 ($100 rule). 2011 irs forms You must further reduce the total of all your casualty or theft losses by 10% of your adjusted gross income (10% rule). 2011 irs forms You make these reductions on Form 4684. 2011 irs forms These rules are explained next and Table 25-1 summarizes how to apply the $100 rule and the 10% rule in various situations. 2011 irs forms For more detailed explanations and examples, see Publication 547. 2011 irs forms Table 25-1. 2011 irs forms How To Apply the Deduction Limits for Personal-Use Property   $100 Rule 10% Rule General Application You must reduce each casualty or theft loss by $100 when figuring your deduction. 2011 irs forms Apply this rule after you have figured the amount of your loss. 2011 irs forms You must reduce your total casualty or theft loss by 10% of your adjusted gross income. 2011 irs forms Apply this rule after you reduce each loss by $100 (the $100 rule). 2011 irs forms Single Event Apply this rule only once, even if many pieces of property are affected. 2011 irs forms Apply this rule only once, even if many pieces of property are affected. 2011 irs forms More Than One Event Apply to the loss from each event. 2011 irs forms Apply to the total of all your losses from all events. 2011 irs forms More Than One Person— With Loss From the Same Event (other than a married couple filing jointly) Apply separately to each person. 2011 irs forms Apply separately to each person. 2011 irs forms Married Couple—With Loss From the Same Event Filing Jointly Apply as if you were one person. 2011 irs forms Apply as if you were one person. 2011 irs forms Filing Separately Apply separately to each spouse. 2011 irs forms Apply separately to each spouse. 2011 irs forms More Than One Owner (other than a married couple filing jointly) Apply separately to each owner of jointly owned property. 2011 irs forms Apply separately to each owner of jointly owned property. 2011 irs forms Property used partly for business and partly for personal purposes. 2011 irs forms   When property is used partly for personal purposes and partly for business or income-producing purposes, the casualty or theft loss deduction must be figured separately for the personal-use part and for the business or income-producing part. 2011 irs forms You must figure each loss separately because the $100 rule and the 10% rule apply only to the loss on the personal-use part of the property. 2011 irs forms $100 Rule After you have figured your casualty or theft loss on personal-use property, you must reduce that loss by $100. 2011 irs forms This reduction applies to each total casualty or theft loss. 2011 irs forms It does not matter how many pieces of property are involved in an event. 2011 irs forms Only a single $100 reduction applies. 2011 irs forms Example. 2011 irs forms A hailstorm damages your home and your car. 2011 irs forms Determine the amount of loss, as discussed earlier, for each of these items. 2011 irs forms Since the losses are due to a single event, you combine the losses and reduce the combined amount by $100. 2011 irs forms Single event. 2011 irs forms   Generally, events closely related in origin cause a single casualty. 2011 irs forms It is a single casualty when the damage is from two or more closely related causes, such as wind and flood damage caused by the same storm. 2011 irs forms 10% Rule You must reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. 2011 irs forms Apply this rule after you reduce each loss by $100. 2011 irs forms For more information, see the Form 4684 instructions. 2011 irs forms If you have both gains and losses from casualties or thefts, see Gains and losses , later in this discussion. 2011 irs forms Example 1. 2011 irs forms In June, you discovered that your house had been burglarized. 2011 irs forms Your loss after insurance reimbursement was $2,000. 2011 irs forms Your adjusted gross income for the year you discovered the theft is $29,500. 2011 irs forms You first apply the $100 rule and then the 10% rule. 2011 irs forms Figure your theft loss deduction as follows. 2011 irs forms 1) Loss after insurance $2,000 2) Subtract $100 100 3) Loss after $100 rule $1,900 4) Subtract 10% × $29,500 AGI 2,950 5) Theft loss deduction –0– You do not have a theft loss deduction because your loss after you apply the $100 rule ($1,900) is less than 10% of your adjusted gross income ($2,950). 2011 irs forms Example 2. 2011 irs forms In March, you had a car accident that totally destroyed your car. 2011 irs forms You did not have collision insurance on your car, so you did not receive any insurance reimbursement. 2011 irs forms Your loss on the car was $1,800. 2011 irs forms In November, a fire damaged your basement and totally destroyed the furniture, washer, dryer, and other items stored there. 2011 irs forms Your loss on the basement items after reimbursement was $2,100. 2011 irs forms Your adjusted gross income for the year that the accident and fire occurred is $25,000. 2011 irs forms You figure your casualty loss deduction as follows. 2011 irs forms       Base-     Car ment 1) Loss $1,800 $2,100 2) Subtract $100 per incident 100 100 3) Loss after $100 rule $1,700 $2,000 4) Total loss $3,700 5) Subtract 10% × $25,000 AGI 2,500 6) Casualty loss deduction $1,200 Gains and losses. 2011 irs forms   If you had both gains and losses from casualties or thefts to personal-use property, you must compare your total gains to your total losses. 2011 irs forms Do this after you have reduced each loss by any reimbursements and by $100, but before you have reduced the losses by 10% of your adjusted gross income. 2011 irs forms Casualty or theft gains do not include gains you choose to postpone. 2011 irs forms See Publication 547 for information on the postponement of gain. 2011 irs forms Losses more than gains. 2011 irs forms   If your losses are more than your recognized gains, subtract your gains from your losses and reduce the result by 10% of your adjusted gross income. 2011 irs forms The rest, if any, is your deductible loss from personal-use property. 2011 irs forms Gains more than losses. 2011 irs forms   If your recognized gains are more than your losses, subtract your losses from your gains. 2011 irs forms The difference is treated as capital gain and must be reported on Schedule D (Form 1040). 2011 irs forms The 10% rule does not apply to your gains. 2011 irs forms When To Report Gains and Losses Gains. 2011 irs forms   If you receive an insurance or other reimbursement that is more than your adjusted basis in the destroyed or stolen property, you have a gain from the casualty or theft. 2011 irs forms You must include this gain in your income in the year you receive the reimbursement, unless you choose to postpone reporting the gain as explained in Publication 547. 2011 irs forms If you have a loss, see Table 25-2 . 2011 irs forms Table 25-2. 2011 irs forms When To Deduct a Loss IF you have a loss. 2011 irs forms . 2011 irs forms . 2011 irs forms THEN deduct it in the year. 2011 irs forms . 2011 irs forms . 2011 irs forms from a casualty, the loss occurred. 2011 irs forms in a federally declared disaster area, the disaster occurred or the year immediately before the disaster. 2011 irs forms from a theft, the theft was discovered. 2011 irs forms on a deposit treated as a:   • casualty or any ordinary loss, a reasonable estimate can be made. 2011 irs forms • bad debt, deposits are totally worthless. 2011 irs forms Losses. 2011 irs forms   Generally, you can deduct a casualty loss that is not reimbursable only in the tax year in which the casualty occurred. 2011 irs forms This is true even if you do not repair or replace the damaged property until a later year. 2011 irs forms   You can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. 2011 irs forms   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. 2011 irs forms Loss on deposits. 2011 irs forms   If your loss is a loss on deposits in an insolvent or bankrupt financial institution, see Loss on Deposits , earlier. 2011 irs forms Disaster Area Loss You generally must deduct a casualty loss in the year it occurred. 2011 irs forms However, if you have a casualty loss from a federally declared disaster that occurred in an area warranting public or individual assistance (or both), you can choose to deduct the loss on your tax return or amended return for either of the following years. 2011 irs forms The year the disaster occurred. 2011 irs forms The year immediately preceding the year the disaster occurred. 2011 irs forms Gains. 2011 irs forms    Special rules apply if you choose to postpone reporting gain on property damaged or destroyed in a federally declared disaster area. 2011 irs forms For those special rules, see Publication 547. 2011 irs forms Postponed tax deadlines. 2011 irs forms   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. 2011 irs forms The tax deadlines the IRS may postpone include those for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA. 2011 irs forms   If any tax deadline is postponed, the IRS will publicize the postponement in your area by publishing a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). 2011 irs forms Go to www. 2011 irs forms irs. 2011 irs forms gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. 2011 irs forms Who is eligible. 2011 irs forms   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. 2011 irs forms Any individual whose main home is located in a covered disaster area (defined next). 2011 irs forms Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. 2011 irs forms Any individual who is a relief worker affiliated with a recognized government or philanthropic organization who is assisting in a covered disaster area. 2011 irs forms 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. 2011 irs forms The main home or principal place of business does not have to be located in the covered disaster area. 2011 irs forms 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. 2011 irs forms The spouse on a joint return with a taxpayer who is eligible for postponements. 2011 irs forms Any individual, business entity, or sole proprietorship not located in a covered disaster area, but whose records necessary to meet a postponed tax deadline are located in the covered disaster area. 2011 irs forms Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. 2011 irs forms Any other person determined by the IRS to be affected by a federally declared disaster. 2011 irs forms Covered disaster area. 2011 irs forms   This is an area of a federally declared disaster in which the IRS has decided to postpone tax deadlines for up to 1 year. 2011 irs forms Abatement of interest and penalties. 2011 irs forms   The IRS may abate the interest and penalties on underpaid income tax for the length of any postponement of tax deadlines. 2011 irs forms More information. 2011 irs forms   For more information, see Disaster Area Losses in Publication 547. 2011 irs forms How To Report Gains and Losses Use Form 4684 to report a gain or a deductible loss from a casualty or theft. 2011 irs forms If you have more than one casualty or theft, use a separate Form 4684 to determine your gain or loss for each event. 2011 irs forms Combine the gains and losses on one Form 4684. 2011 irs forms Follow the form instructions as to which lines to fill out. 2011 irs forms In addition, you must use the appropriate schedule to report a gain or loss. 2011 irs forms The schedule you use depends on whether you have a gain or loss. 2011 irs forms If you have a: Report it on: Gain Schedule D (Form 1040) Loss Schedule A (Form 1040) Adjustments to basis. 2011 irs forms   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. 2011 irs forms Amounts you spend to restore your property after a casualty increase your adjusted basis. 2011 irs forms See Adjusted Basis in chapter 13 for more information. 2011 irs forms Net operating loss (NOL). 2011 irs forms    If your casualty or theft loss deduction causes your deductions for the year to be more than your income for the year, you may have an NOL. 2011 irs forms You can use an NOL to lower your tax in an earlier year, allowing you to get a refund for tax you have already paid. 2011 irs forms Or, you can use it to lower your tax in a later year. 2011 irs forms You do not have to be in business to have an NOL from a casualty or theft loss. 2011 irs forms For more information, see Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. 2011 irs forms Prev  Up  Next   Home   More Online Publications