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2012 Form 1040x

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2012 Form 1040x

2012 form 1040x 3. 2012 form 1040x   Claiming the Special Depreciation Allowance Table of Contents Introduction What Is Qualified Property?Qualified Reuse and Recycling Property Qualified Cellulosic Biofuel Plant Property Qualified Disaster Assistance Property Certain Qualified Property Acquired After December 31, 2007 Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance How Much Can You Deduct? How Can You Elect Not To Claim an Allowance? When Must You Recapture an Allowance? Introduction You can take a special depreciation allowance to recover part of the cost of qualified property (defined next), placed in service during the tax year. 2012 form 1040x The allowance applies only for the first year you place the property in service. 2012 form 1040x For qualified property placed in service in 2013, you can take an additional 50% special allowance. 2012 form 1040x The allowance is an additional deduction you can take after any section 179 deduction and before you figure regular depreciation under MACRS for the year you place the property in service. 2012 form 1040x This chapter explains what is qualified property. 2012 form 1040x It also includes rules regarding how to figure an allowance, how to elect not to claim an allowance, and when you must recapture an allowance. 2012 form 1040x Corporations can elect to accelerate certain minimum tax credits in lieu of claiming the special depreciation allowance for eligible qualified property. 2012 form 1040x See Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance , later. 2012 form 1040x See chapter 6 for information about getting publications and forms. 2012 form 1040x What Is Qualified Property? Your property is qualified property if it is one of the following. 2012 form 1040x Qualified reuse and recycling property. 2012 form 1040x Qualified cellulosic biofuel plant property. 2012 form 1040x Qualified disaster assistance property. 2012 form 1040x Certain qualified property acquired after December 31, 2007. 2012 form 1040x The following discussions provide information about the types of qualified property listed above for which you can take the special depreciation allowance. 2012 form 1040x Qualified Reuse and Recycling Property You can take a 50% special depreciation allowance for qualified reuse and recycling property. 2012 form 1040x Qualified reuse and recycling property is any machinery or equipment (not including buildings or real estate), along with any appurtenance, that is used exclusively to collect, distribute, or recycle qualified reuse and recyclable materials (as defined in section 168(m)(3)(B) of the Internal Revenue Code). 2012 form 1040x Qualified reuse and recycling property also includes software necessary to operate such equipment. 2012 form 1040x The property must meet the following requirements. 2012 form 1040x The property must be depreciated under MACRS. 2012 form 1040x The property must have a useful life of at least 5 years. 2012 form 1040x The original use of the property must begin with you after August 31, 2008. 2012 form 1040x You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) after August 31, 2008, with no binding written contract for the acquisition in effect before September 1, 2008. 2012 form 1040x The property must be placed in service for use in your trade or business after August 31, 2008. 2012 form 1040x Excepted Property Qualified reuse and recycling property does not include any of the following. 2012 form 1040x Any rolling stock or other equipment used to transport reuse or recyclable materials. 2012 form 1040x Property required to be depreciated using the Alternative Depreciation System (ADS). 2012 form 1040x For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . 2012 form 1040x Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies. 2012 form 1040x Property for which you elected not to claim any special depreciation allowance (discussed later). 2012 form 1040x Property placed in service and disposed of in the same tax year. 2012 form 1040x Property converted from business use to personal use in the same tax year acquired. 2012 form 1040x Property converted from personal use to business use in the same or later tax year may be qualified reuse and recycling property. 2012 form 1040x Qualified Cellulosic Biofuel Plant Property You can take a 50% special depreciation allowance for qualified cellulosic biofuel plant property. 2012 form 1040x Cellulosic biofuel is any liquid fuel which is produced from any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis. 2012 form 1040x Examples include bagasse (from sugar cane), corn stalks, and switchgrass. 2012 form 1040x The property must meet the following requirements. 2012 form 1040x The property is used in the United States solely to produce cellulosic biofuel. 2012 form 1040x The original use of the property must begin with you after December 20, 2006. 2012 form 1040x You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) after December 20, 2006, with no binding written contract for acquisition in effect before December 21, 2006. 2012 form 1040x The property must be placed in service for use in your trade or business or for the production of income after October 3, 2008, and before January 3, 2013. 2012 form 1040x Note. 2012 form 1040x For property placed in service after January 2, 2013, and before January 1, 2014, you can take a 50% special depreciation allowance for qualified second generation biofuel plant property that is used solely in the United States to produce second generation biofuel (as defined in section 40(b)(6)(E)). 2012 form 1040x The other requirements for qualified second generation biofuel plant property to be eligible for the special depreciation allowance are identical to the requirements discussed for Qualified Cellulosic Biofuel Plant Property above. 2012 form 1040x Special Rules Sale-leaseback. 2012 form 1040x   If you sold qualified cellulosic biofuel plant property you placed in service after October 3, 2008, and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. 2012 form 1040x   The property will not qualify for the special allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before December 21, 2006. 2012 form 1040x Syndicated leasing transactions. 2012 form 1040x   If qualified cellulosic biofuel plant property is originally placed in service by a lessor after October 3, 2008, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. 2012 form 1040x   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of sale if the property is sold within 3 months after the final unit is placed in service and the period between the times the first and last units are placed in service does not exceed 12 months. 2012 form 1040x Excepted Property Qualified cellulosic biofuel plant property does not include any of the following. 2012 form 1040x Property placed in service and disposed of in the same tax year. 2012 form 1040x Property converted from business use to personal use in the same tax year it is acquired. 2012 form 1040x Property converted from personal use to business use in the same or later tax year may be qualified cellulosic biomass ethanol plant property. 2012 form 1040x Property required to be depreciated using the Alternative Depreciation System (ADS). 2012 form 1040x For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . 2012 form 1040x Property any portion of which is financed with the proceeds of any obligation the interest on which is exempt from tax under section 103 of the Internal Revenue Code. 2012 form 1040x Property for which you elected not to claim any special depreciation allowance (discussed later). 2012 form 1040x Property for which a deduction was taken under section 179C for certain qualified refinery property. 2012 form 1040x Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies. 2012 form 1040x Qualified Disaster Assistance Property You can take a 50% special depreciation allowance for qualified disaster assistance property placed in service in federally declared disaster areas in which the disaster occurred in 2009. 2012 form 1040x A list of the federally declared disaster areas is available at the FEMA website at www. 2012 form 1040x fema. 2012 form 1040x gov. 2012 form 1040x Your property is qualified disaster assistance property if it meets the following requirements. 2012 form 1040x The property is nonresidential real property or residential real property placed in service before January 1, 2014, in a federally declared disaster area in which the disaster occurred in 2009. 2012 form 1040x You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2 ) on or after the applicable disaster date, with no binding written contract for the acquisition in effect before the applicable disaster date. 2012 form 1040x The property must rehabilitate property damaged, or replace property destroyed or condemned, as a result of the applicable federally declared disaster. 2012 form 1040x The property must be similar in nature to, and located in the same county as, the rehabilitated or replaced property. 2012 form 1040x The original use of the property within the applicable disaster area must have begun with you on or after the applicable disaster date. 2012 form 1040x The property is placed in service by you on or before the date which is the last day of the fourth calendar year. 2012 form 1040x Substantially all (80% or more) of the use of the property must be in the active conduct of your trade or business in a federally declared disaster area, occurring in 2009. 2012 form 1040x It is not excepted property (explained later in Excepted Property ). 2012 form 1040x Special Rules Sale-leaseback. 2012 form 1040x   If you sold qualified disaster assistance property you placed in service after the applicable disaster date and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. 2012 form 1040x   The property will not qualify for the special allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before the applicable disaster date. 2012 form 1040x Syndicated leasing transactions. 2012 form 1040x   If qualified disaster assistance property is originally placed in service by a lessor after the applicable disaster date, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. 2012 form 1040x   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of sale if the property is sold within 3 months after the final unit is placed in service and the period between the times the first and last units are placed in service does not exceed 12 months. 2012 form 1040x Excepted Property Qualified disaster assistance property does not include any of the following. 2012 form 1040x Property required to be depreciated using the Alternative Depreciation System (ADS). 2012 form 1040x For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . 2012 form 1040x Property any portion of which is financed with the proceeds of a tax-exempt obligation under section 103 of the Internal Revenue Code. 2012 form 1040x Any qualified revitalization building (defined later) placed in service before January 1, 2010, for which you have elected to claim a commercial revitalization deduction for qualified revitalization expenditures. 2012 form 1040x Any property used in connection with any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, or any store, the principal business of which is the sale of alcoholic beverages for consumption off premises. 2012 form 1040x Any property for which the special allowance under section 168(k) or section 1400N(d) of the Internal Revenue Code applies. 2012 form 1040x Property for which you elected not to claim any special depreciation allowance (discussed later). 2012 form 1040x Property placed in service and disposed of in the same tax year. 2012 form 1040x Property converted from business use to personal use in the same tax year acquired. 2012 form 1040x Property converted from personal use to business use in the same or later tax year may be qualified disaster assistance property. 2012 form 1040x Any gambling or animal racing property (defined later). 2012 form 1040x Qualified revitalization building. 2012 form 1040x   This is a commercial building and its structural components that you placed in service in a renewal community before January 1, 2010. 2012 form 1040x If the building is new, the original use of the building must begin with you. 2012 form 1040x If the building is not new, you must substantially rehabilitate the building and then place it in service. 2012 form 1040x For more information, including definitions of substantially rehabilitated building and qualified revitalization expenditure, see section 1400I(b) of the Internal Revenue Code. 2012 form 1040x Gambling or animal racing property. 2012 form 1040x   Gambling or animal racing property includes the following personal and real property. 2012 form 1040x Any equipment, furniture, software, or other property used directly in connection with gambling, the racing of animals, or the on-site viewing of such racing. 2012 form 1040x Any real property determined by square footage (other than any portion that is less than 100 square feet) that is dedicated to gambling, the racing of animals, or the on-site viewing of such racing. 2012 form 1040x Certain Qualified Property Acquired After December 31, 2007 You can take a 50% special depreciation deduction allowance for certain qualified property acquired after December 31, 2007. 2012 form 1040x Your property is qualified property if it meets the following requirements. 2012 form 1040x It is one of the following types of property. 2012 form 1040x Tangible property depreciated under MACRS with a recovery period of 20 years or less. 2012 form 1040x Water utility property. 2012 form 1040x Computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. 2012 form 1040x (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS. 2012 form 1040x ) Qualified leasehold improvement property (defined under Qualified leasehold improvement property later). 2012 form 1040x You must have acquired the property after December 31, 2007, with no binding written contract for the acquisition in effect before January 1, 2008. 2012 form 1040x The property must be placed in service for use in your trade or business or for the production of income before January 1, 2014 (before January 1, 2015, for certain property with a long production period and certain aircraft (defined next)). 2012 form 1040x The original use of the property must begin with you after December 31, 2007. 2012 form 1040x It is not excepted property (explained later in Excepted property). 2012 form 1040x Qualified leasehold improvement property. 2012 form 1040x    Generally, this is any improvement to an interior part of a building that is nonresidential real property, if all the following requirements are met. 2012 form 1040x The improvement is made under or according to a lease by the lessee (or any sublessee) or the lessor of that part of the building. 2012 form 1040x That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part. 2012 form 1040x The improvement is placed in service more than 3 years after the date the building was first placed in service by any person. 2012 form 1040x The improvement is section 1250 property. 2012 form 1040x See chapter 3 in Publication 544, Sales and Other Dispositions of Assets, for the definition of section 1250 property. 2012 form 1040x   However, a qualified leasehold improvement does not include any improvement for which the expenditure is attributable to any of the following. 2012 form 1040x The enlargement of the building. 2012 form 1040x Any elevator or escalator. 2012 form 1040x Any structural component benefiting a common area. 2012 form 1040x The internal structural framework of the building. 2012 form 1040x   Generally, a binding commitment to enter into a lease is treated as a lease and the parties to the commitment are treated as the lessor and lessee. 2012 form 1040x However, a lease between related persons is not treated as a lease. 2012 form 1040x Related persons. 2012 form 1040x   For this purpose, the following are related persons. 2012 form 1040x Members of an affiliated group. 2012 form 1040x An individual and a member of his or her family, including only a spouse, child, parent, brother, sister, half-brother, half-sister, ancestor, and lineal descendant. 2012 form 1040x A corporation and an individual who directly or indirectly owns 80% or more of the value of the outstanding stock of that corporation. 2012 form 1040x Two corporations that are members of the same controlled group. 2012 form 1040x A trust fiduciary and a corporation if 80% or more of the value of the outstanding stock is directly or indirectly owned by or for the trust or grantor of the trust. 2012 form 1040x The grantor and fiduciary, and the fiduciary and beneficiary, of any trust. 2012 form 1040x The fiduciaries of two different trusts, and the fiduciaries and beneficiaries of two different trusts, if the same person is the grantor of both trusts. 2012 form 1040x A tax-exempt educational or charitable organization and any person (or, if that person is an individual, a member of that person's family) who directly or indirectly controls the organization. 2012 form 1040x Two S corporations, and an S corporation and a regular corporation, if the same persons own 80% or more of the value of the outstanding stock of each corporation. 2012 form 1040x A corporation and a partnership if the same persons own both of the following. 2012 form 1040x 80% or more of the value of the outstanding stock of the corporation. 2012 form 1040x 80% or more of the capital or profits interest in the partnership. 2012 form 1040x The executor and beneficiary of any estate. 2012 form 1040x Long Production Period Property To be qualified property, long production period property must meet the following requirements. 2012 form 1040x It must meet the requirements in (2)-(5), above. 2012 form 1040x The property has a recovery period of at least 10 years or is transportation property. 2012 form 1040x Transportation property is tangible personal property used in the trade or business of transporting persons or property. 2012 form 1040x The property is subject to section 263A of the Internal Revenue Code. 2012 form 1040x The property has an estimated production period exceeding 1 year and an estimated production cost exceeding $1,000,000. 2012 form 1040x Noncommercial Aircraft To be qualified property, noncommercial aircraft must meet the following requirements. 2012 form 1040x It must meet the requirements in (2)-(5), above. 2012 form 1040x The aircraft must not be tangible personal property used in the trade or business of transporting persons or property (except for agricultural or firefighting purposes). 2012 form 1040x The aircraft must be purchased (as discussed under Property Acquired by Purchase in chapter 2 ) by a purchaser who at the time of the contract for purchase, makes a nonrefundable deposit of the lesser of 10% of the cost or $100,000. 2012 form 1040x The aircraft must have an estimated production period exceeding four months and a cost exceeding $200,000. 2012 form 1040x Special Rules Sale-leaseback. 2012 form 1040x   If you sold qualified property you placed in service after December 31, 2007, and leased it back within 3 months after you originally placed in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback. 2012 form 1040x   The property will not qualify for the special depreciation allowance if the lessee or a related person to the lessee or lessor had a written binding contract in effect for the acquisition of the property before January 1, 2008. 2012 form 1040x Syndicated leasing transactions. 2012 form 1040x   If qualified property is originally placed in service by a lessor after December 31, 2007, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale. 2012 form 1040x   Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of the last sale if the property is sold within 3 months after the final unit is placed in service and the period between the time the first and last units are placed in service does not exceed 12 months. 2012 form 1040x Excepted Property Qualified property does not include any of the following. 2012 form 1040x Property placed in service and disposed of in the same tax year. 2012 form 1040x Property converted from business use to personal use in the same tax year acquired. 2012 form 1040x Property converted from personal use to business use in the same or later tax year may be qualified property. 2012 form 1040x Property required to be depreciated under the Alternative Depreciation System (ADS). 2012 form 1040x This includes listed property used 50% or less in a qualified business use. 2012 form 1040x For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies , in chapter 4 . 2012 form 1040x Qualified restaurant property (as defined in section 168(e)(7) of the Internal Revenue Code). 2012 form 1040x Qualified retail improvement property (as defined in section 168(e)(8) of the Internal Revenue Code). 2012 form 1040x Property for which you elected not to claim any special depreciation allowance (discussed later). 2012 form 1040x Property for which you elected to accelerate certain credits in lieu of the special depreciation allowance (discussed next). 2012 form 1040x Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance An election made by a corporation to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, continues to apply to round 2 extension property (as defined in section 168(k)(4)(I)(iv)), unless the corporation made an election not to apply the section 168(k)(4) election to round 2 extension property for its first tax year ending after December 31, 2010. 2012 form 1040x For 2013, round 2 extension property generally is long production period and noncommercial aircraft if acquired after March 31, 2008, and placed in service after December 31, 2012, but before January 1, 2014. 2012 form 1040x An election made by a corporation to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, continues to apply to round 3 extension property (as defined in section 168(k)(4)(J)(iv)), unless the corporation makes an election not to apply the section 168(k)(4) election to round 3 extension property. 2012 form 1040x If a corporation did not make a section 168(k)(4) election for either its first tax year ending after March 31, 2008, its first tax year ending after December 31, 2008, or its first tax year ending after December 31, 2010, the corporation may elect for its first tax year ending after December 31, 2012, to claim pre-2006 unused minimum tax credits in lieu of claiming the special depreciation allowance for only round 3 extension property. 2012 form 1040x If you make an election to accelerate these credits in lieu of claiming the special depreciation allowance for eligible property, you must not take the 50% special depreciation allowance for the property and must depreciate the basis in the property under MACRS using the straight line method. 2012 form 1040x See Which Depreciation Method Applies in chapter 4 . 2012 form 1040x Once made, the election cannot be revoked without IRS consent. 2012 form 1040x Additional guidance. 2012 form 1040x   For additional guidance on the election to accelerate the research or minimum tax credit in lieu of claiming the special depreciation allowance, see Rev. 2012 form 1040x Proc. 2012 form 1040x 2008-65 on page 1082 of Internal Revenue Bulletin 2008-44, available at www. 2012 form 1040x irs. 2012 form 1040x gov/pub/irs-irbs/irb08-44. 2012 form 1040x pdf, Rev. 2012 form 1040x Proc. 2012 form 1040x 2009-16 on page 449 of Internal Revenue Bulletin 2009-06, available at www. 2012 form 1040x irs. 2012 form 1040x gov/pub/irs-irbs/irb09-06. 2012 form 1040x pdf, and Rev. 2012 form 1040x Proc. 2012 form 1040x 2009-33 on page 150 of Internal Revenue Bulletin 2009-29, available at www. 2012 form 1040x irs. 2012 form 1040x gov/pub/irs-irbs/irb09-29. 2012 form 1040x pdf. 2012 form 1040x Also, see Form 3800, General Business Credit; Form 8827, Credit for Prior Year Minimum Tax — Corporations; and related instructions. 2012 form 1040x   Additional guidance regarding the election to accelerate the minimum tax credit in lieu of claiming the special depreciation allowance for round 2 extension property and round 3 extension property may also be available in later Internal Revenue Bulletins available at www. 2012 form 1040x irs. 2012 form 1040x gov/irb. 2012 form 1040x How Much Can You Deduct? Figure the special depreciation allowance by multiplying the depreciable basis of qualified reuse and recycling property, qualified cellulosic biofuel plant property, qualified disaster assistance property, and certain qualified property acquired after December 31, 2007, by 50%. 2012 form 1040x For qualified property other than listed property, enter the special allowance on line 14 in Part II of Form 4562. 2012 form 1040x For qualified property that is listed property, enter the special allowance on line 25 in Part V of Form 4562. 2012 form 1040x If you place qualified property in service in a short tax year, you can take the full amount of a special depreciation allowance. 2012 form 1040x Depreciable basis. 2012 form 1040x   This is the property's cost or other basis multiplied by the percentage of business/investment use, reduced by the total amount of any credits and deductions allocable to the property. 2012 form 1040x   The following are examples of some credits and deductions that reduce depreciable basis. 2012 form 1040x Any section 179 deduction. 2012 form 1040x Any deduction for removal of barriers to the disabled and the elderly. 2012 form 1040x Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. 2012 form 1040x Basis adjustment to investment credit property under section 50(c) of the Internal Revenue Code. 2012 form 1040x   For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. 2012 form 1040x   For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property in chapter 1 . 2012 form 1040x For a discussion of business/investment use, see Partial business or investment use under Property Used in Your Business or Income-Producing Activity in chapter 1 . 2012 form 1040x Depreciating the remaining cost. 2012 form 1040x   After you figure your special depreciation allowance for your qualified property, you can use the remaining cost to figure your regular MACRS depreciation deduction (discussed in chapter 4 . 2012 form 1040x Therefore, you must reduce the depreciable basis of the property by the special depreciation allowance before figuring your regular MACRS depreciation deduction. 2012 form 1040x Example. 2012 form 1040x On November 1, 2013, Tom Brown bought and placed in service in his business qualified property that cost $450,000. 2012 form 1040x He did not elect to claim a section 179 deduction. 2012 form 1040x He deducts 50% of the cost ($225,000) as a special depreciation allowance for 2013. 2012 form 1040x He uses the remaining $225,000 of cost to figure his regular MACRS depreciation deduction for 2013 and later years. 2012 form 1040x Like-kind exchanges and involuntary conversions. 2012 form 1040x   If you acquire qualified property in a like-kind exchange or involuntary conversion, the carryover basis of the acquired property is eligible for a special depreciation allowance. 2012 form 1040x After you figure your special allowance, you can use the remaining carryover basis to figure your regular MACRS depreciation deduction. 2012 form 1040x In the year you claim the allowance (the year you place in service the property received in the exchange or dispose of involuntarily converted property), you must reduce the carryover basis of the property by the allowance before figuring your regular MACRS depreciation deduction. 2012 form 1040x See Figuring the Deduction for Property Acquired in a Nontaxable Exchange , in chapter 4 under How Is the Depreciation Deduction Figured . 2012 form 1040x The excess basis (the part of the acquired property's basis that exceeds its carryover basis) is also eligible for a special depreciation allowance. 2012 form 1040x How Can You Elect Not To Claim an Allowance? You can elect, for any class of property, not to deduct any special allowances for all property in such class placed in service during the tax year. 2012 form 1040x To make an election, attach a statement to your return indicating what election you are making and the class of property for which you are making the election. 2012 form 1040x When to make election. 2012 form 1040x   Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. 2012 form 1040x   However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). 2012 form 1040x Attach the election statement to the amended return. 2012 form 1040x On the amended return, write “Filed pursuant to section 301. 2012 form 1040x 9100-2. 2012 form 1040x ” Revoking an election. 2012 form 1040x   Once you elect not to deduct a special depreciation allowance for a class of property, you cannot revoke the election without IRS consent. 2012 form 1040x A request to revoke the election is a request for a letter ruling. 2012 form 1040x If you elect not to have any special allowance apply, the property may be subject to an alternative minimum tax adjustment for depreciation. 2012 form 1040x When Must You Recapture an Allowance? When you dispose of property for which you claimed a special depreciation allowance, any gain on the disposition is generally recaptured (included in income) as ordinary income up to the amount of the special depreciation allowance previously allowed or allowable. 2012 form 1040x See When Do You Recapture MACRS Depreciation in chapter 4 or more information. 2012 form 1040x Recapture of allowance deducted for qualified GO Zone property. 2012 form 1040x   If, in any year after the year you claim the special depreciation allowance for qualified GO Zone property (including specified GO Zone extension property), the property ceases to be used in the GO Zone, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. 2012 form 1040x For additional guidance, see Notice 2008-25 on page 484 of Internal Revenue Bulletin 2008-9. 2012 form 1040x Qualified cellulosic biomass ethanol plant property and qualified cellulosic biofuel plant property. 2012 form 1040x   If, in any year after the year you claim the special depreciation allowance for any qualified cellulosic biomass ethanol plant property or qualified biofuel plant property, the property ceases to be qualified cellulosic biomass ethanol plant property or qualified biofuel plant property, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. 2012 form 1040x Recapture of allowance for qualified Recovery Assistance property. 2012 form 1040x   If, in any year after the year you claim the special depreciation allowance for qualified Recovery Assistance property, the property ceases to be used in the Kansas disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. 2012 form 1040x For additional guidance, see Notice 2008-67 on page 307 of Internal Revenue Bulletin 2008-32. 2012 form 1040x Recapture of allowance for qualified disaster assistance property. 2012 form 1040x   If, in any year after the year you claim the special depreciation allowance for qualified disaster assistance property, the property ceases to be used in the applicable disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. 2012 form 1040x   For additional guidance, see Notice 2008-67 on page 307 of Internal Revenue Bulletin 2008-32. 2012 form 1040x Prev  Up  Next   Home   More Online Publications
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Not all work-at-home opportunities deliver on their promises. Some classic work-at-home schemes are medical billing, envelope stuffing and assembly or craftwork. Ads for these businesses say: "Be part of one of America's fastest growing industries. Earn thousands of dollars a month from home!" Legitimate work-at-home program promoters should tell you, in writing, what's involved in the program they are selling. Here are some questions you might ask a promoter:

  • What tasks will I have to perform? (Ask the program sponsor to list every step of the job.)
  • Will I be paid a salary or will my pay be based on commission?
  • Who will pay me?
  • When will I get my first paycheck?
  • What is the total cost of the work-at home program, including supplies, equipment and membership fees? What will I get for my money?

The answers to these questions may help you determine whether a work-at-home program is appropriate for your circumstances, and whether it is legitimate.

Multi-Level Marketing

Some multilevel marketing plans are legitimate. However, others are illegal pyramid schemes. In pyramids, commissions are based on the number of distributors recruited.

Most of the product sales are made to these distributors, not to consumers in general. The underlying goods and services, which vary from vitamins to car leases, serve only to make the schemes look legitimate. Most people end up with nothing to show for their money except the expensive products or marketing materials they were pressured to buy.

If you're thinking about joining what appears to be a legitimate multilevel marketing plan, take time to learn about the plan.

  • What is the company's track record?
  • What products does it sell?
  • Does it sell products to the public-at-large?
  • Does it have evidence to back up the claims it makes about its product?
  • Is the product competitively priced?
  • Is it likely to appeal to a large customer base?
  • How much does it cost to join the plan?
  • Are minimum monthly sales required to earn a commission?
  • Will you be required to recruit new distributors to earn your commission?

Net Based Business Opportunities

The Federal Trade Commission's Work-at-Home Schemes publication says that many Internet business opportunities are schemes that promise more than they can deliver. The companies lure would-be entrepreneurs with false promises of big earnings for little effort. Some tips to finding a legitimate opportunity:

  • Consider the promotion carefully.
  • Get earnings claims in writing and compare them with the experience of previous franchise and business opportunity owners.
  • Study the business opportunity's franchise disclosure document.
  • Visit previous franchise and business opportunity owners in person, preferably at their place of business.
  • Check out the company with the local consumer protection agency and Better Business Bureau. See if there is any record of unresolved complaints.
  • If the business opportunity involves selling products from well-known companies, verify the relationship with the legal department of the company whose merchandise would be promoted.
  • Consult an attorney, accountant or other business advisor before you put any money down or sign any papers.
  • Take your time. Promoters of fraudulent business opportunities are likely to use high-pressure sales tactics to get you to buy in. If the business opportunity is legitimate, it'll still be around when you're ready to decide.

Mystery Shopper Jobs

Mystery shopper jobs may seem easy and lucrative, but they may be fraudulent. According to the FTC, some scams require you to pay a fee for the privilege of working for the company. Other companies send you a fake cashier's check to deposit; then they instruct you to send most of the money to another address and use only a small amount for the shopping trip. When the bank discovers that the check is not legal, you will be liable for repaying the money. For more information on mystery shopping, check your local bookstore, library or the Mystery Shopping Providers Association.

The 2012 Form 1040x

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