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Form 1040 Ez

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Form 1040 Ez

Form 1040 ez Índice Pérdidas en ciertas actividades madereras, retroactivación a 5 años, Traspaso a 5 años de NOL por ciertas pérdidas en actividades madereras. Form 1040 ez A Actividad maderera: Costos de reforestación, Costos de Reforestación Retroactivación a 5 años de NOL, Costos de Reforestación Apógrafo de la declaración de impuestos, solicitud de, Solicitud de apógrafo de la declaración de impuestos. Form 1040 ez Ayuda: Ayuda especial del IRS, Cómo Obtener Ayuda con los Impuestos Cibersitio del IRS, Cómo Obtener Ayuda con los Impuestos Cómo obtener, Cómo Obtener Ayuda con los Impuestos Teléfono, Cómo Obtener Ayuda con los Impuestos C Cancelación de endeudamiento, Exclusión de Ciertas Cancelaciones de Endeudamiento por Motivos del Huracán Katrina Cibersitio del IRS, Servicios gratis con los impuestos. Form 1040 ez Contribuciones caritativas, Suspensión Temporal de los Límites sobre las Contribuciones Caritativas Contribuyentes afectados, Contribuyentes afectados. Form 1040 ez Conversión involuntaria (ver Plazo de reposición para que las ganancias no sean reconocidas) Copia de su declaración de impuestos, solicitud de, Solicitud de copia de la declaración de impuestos. Form 1040 ez Costos de demolición, Costos de Demolición y Limpieza Costos de limpieza, Costos de Demolición y Limpieza Costos de reforestación, Costos de Reforestación Crédito Hope (ver Créditos por enseñanza superior) Crédito perpétuo (vitalicio) por aprendizaje (ver Créditos por enseñanza superior) Crédito por ingreso del trabajo, Crédito por Ingreso del Trabajo y Crédito Tributario por Hijos Crédito por la retención de empleados, Créditos por la Retención de Empleados Crédito por oportunidad de trabajo, Crédito por Oportunidad de Trabajo Crédito por vivienda para afectados por el huracán Katrina, Crédito por Vivienda del Huracán Katrina Crédito tributario por hijos, Crédito por Ingreso del Trabajo y Crédito Tributario por Hijos Crédito tributario por rehabilitación, Aumento del Crédito Tributario por Rehabilitación Créditos por enseñanza superior, Créditos Tributarios por Enseñanza Superior Créditos: Enseñanza superior, Créditos Tributarios por Enseñanza Superior Impuesto por rehabilitación, Aumento del Crédito Tributario por Rehabilitación Ingreso del trabajo, Crédito por Ingreso del Trabajo y Crédito Tributario por Hijos Oportunidad de trabajo, Crédito por Oportunidad de Trabajo Retención de empleados , Créditos por la Retención de Empleados Tributario por hijos, Crédito por Ingreso del Trabajo y Crédito Tributario por Hijos Vivienda para afectados por el huracán Katrina, Crédito por Vivienda del Huracán Katrina Cuentas IRA y otros planes de jubilación, Las Cuentas IRA y Otros Planes de Jubilación D Declaración de impuestos: Solicitud de apógrafo, Solicitud de apógrafo de la declaración de impuestos. Form 1040 ez Solicitud de una copia, Solicitud de copia de la declaración de impuestos. Form 1040 ez Deducción caritativa: Inventario de alimentos, Deducción Caritativa por Contribuciones de Inventario de Alimentos Inventario de libros, Deducción Caritativa por Contribuciones de Inventarios de Libros a Escuelas Públicas Deducción conforme a la sección 179, Mayor Deducción Conforme a la Sección 179 Defensor del contribuyente, Poniéndose en contacto con el Defensor del Contribuyente. Form 1040 ez Depreciación : Asignación especial , Asignación (Descuento) Especial de Depreciación Depreciación: Propiedad calificada de la Zona GO, Propiedad calificada de la Zona GO. Form 1040 ez Distribución calificada por motivos del huracán, Distribución calificada por motivos del huracán. Form 1040 ez Distribuciones: Compra o construcción de una vivienda, Reintegro de Distribuciones Calificadas por la Compra o Construcción de un Hogar Principal Huracán calificado, Distribución calificada por motivos del huracán. Form 1040 ez Reintegro de, Reintegro de Distribuciones Calificadas por Motivos de un Huracán Tributación de, Tributación de Distribuciones Calificadas por Motivos de un Huracán E Exención adicional por provisión de vivienda, Exenciones Adicionales por la Provisión de Vivienda para Personas que Tuvieron que Abandonar sus Hogares por Causa del Huracán Katrina F Fechas de vencimiento, prorrogadas, Prórrogas de las Fechas de Vencimiento Tributarias I Internet: Cibersitio del IRS, Servicios gratis con los impuestos. Form 1040 ez Inventario de alimentos, deducción caritativa por , Deducción Caritativa por Contribuciones de Inventario de Alimentos Inventario de libros, deducción caritativa por, Deducción Caritativa por Contribuciones de Inventarios de Libros a Escuelas Públicas P Pérdida calificada en una Zona GO, Pérdida calificada en una Zona GO. Form 1040 ez Pérdidas netas de operación , Pérdidas Netas de Operación Pérdidas por hechos fortuitos y robos, Pérdidas por Hechos Fortuitos y Robos Pérdidas por robo, Pérdidas por Hechos Fortuitos y Robos Plan de jubilación elegible, Plan de jubilación elegible. Form 1040 ez Planes de jubilación, Las Cuentas IRA y Otros Planes de Jubilación Plazo de reposición para que las ganancias no sean reconocidas, Período de Reposición para que las Ganancias no sean Reconocidas R Reembolsos de millas, voluntarios que prestaron servicios con fines caritativos, Reembolsos de Millas a Voluntarios que Prestaron Servicios con Fines Caritativos Reubicación temporal, Alivio Tributario para la Reubicación Temporal S Servicio de Impuestos Internos (IRS): Cibersitio del, Servicios gratis con los impuestos. Form 1040 ez Subsidio hipotecario federal, recuperación, Recuperación del Subsidio Hipotecario Federal T Tasa estándar por milla, uso con fines caritativos, Tasa Estándar por Milla para el Uso de Vehículos para Fines Caritativos Z Zona central del desastre, Zona de Oportunidad del Golfo (GO) (Zona Central del Desastre) Zona de desastre con cobertura: Katrina, Zona de Desastre del Huracán Katrina con Cobertura Rita, Zona de Desastre del Huracán Rita (Zona de Desastre de Rita con Cobertura) Wilma, Zona de Desastre del Huracán Wilma con Cobertura Zona de desastre: Huracán Katrina, Zona de Desastre del Huracán Katrina Huracán Rita, Zona de Desastre del Huracán Rita (Zona de Desastre de Rita con Cobertura) Huracán Wilma, Zona de Desastre del Huracán Wilma Zona de Oportunidad del Golfo (GO), Zona de Oportunidad del Golfo (GO) (Zona Central del Desastre) Zona GO de Rita, Zona GO de Rita Zona GO de Wilma, Zona GO de Wilma Anterior  Subir     Inicio   More Online Publications
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Contact My Local Office in North Dakota

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City  Street Address  Days/Hours of Service  Telephone* 
Bismarck 

4503 Coleman St.
Suite 101
Bismarck, ND  58503 

Monday-Friday - 8:30 a.m. - 4:30 p.m.
(Closed for lunch 11:00 a.m. - 12:00 noon)

 

**This office will be closed 4/17**

 

Services Provided

(701) 221-5834 
Fargo  657 Second Ave. N.
Fargo, ND 58102 

Monday-Friday - 8:30 a.m. - 4:30 p.m.

 

Services Provided

(701) 232-4710 
Grand Forks  102 N. Fourth St.
Grand Forks, ND 58203 

Monday-Friday - 8:30 a.m. - 4:30 p.m.
(Closed for lunch 11:00 a.m. - 12:00 noon)

 

**This office will be closed 3/31**

 

Services Provided

(701) 746-5283 
Minot  315 S. Main St.
Suite 316
Minot, ND 58701 

Monday-Friday - 8:30 a.m. - 4:30 p.m.
(Closed for lunch 11:00 a.m. - 12:00 noon)

 

Services Provided

(701) 839-7741 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service: Call (701) 237-8342 in Fargo or 1-877-777-4778 elsewhere, or see Publication 1546, The Taxpayer Advocate Service of the IRS.

For further information, see Tax Topic 104.

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
657 2nd Ave., North
Fargo, ND 58102

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Form 1040 Ez

Form 1040 ez Publication 547 - Main Content Table of Contents CasualtyFamily pet. Form 1040 ez Progressive deterioration. Form 1040 ez Special Procedure for Damage From Corrosive Drywall Theft Loss on Deposits Proof of Loss Figuring a LossGain from reimbursement. Form 1040 ez Business or income-producing property. Form 1040 ez Loss of inventory. Form 1040 ez Leased property. Form 1040 ez Exception for personal-use real property. Form 1040 ez Decrease in Fair Market Value Adjusted Basis Insurance and Other Reimbursements Deduction Limits2% Rule $100 Rule 10% Rule Figuring the Deduction Figuring a GainPostponement of Gain When To Report Gains and LossesLoss on deposits. Form 1040 ez Lessee's loss. Form 1040 ez Disaster Area LossesDisaster loss to inventory. Form 1040 ez Main home in disaster area. Form 1040 ez Unsafe home. Form 1040 ez Time limit for making choice. Form 1040 ez Revoking your choice. Form 1040 ez Figuring the loss deduction. Form 1040 ez How to report the loss on Form 1040X. Form 1040 ez Records. Form 1040 ez Need a copy of your tax return for the preceding year? Postponed Tax Deadlines Contacting the Federal Emergency Management Agency (FEMA) How To Report Gains and LossesProperty held 1 year or less. Form 1040 ez Property held more than 1 year. Form 1040 ez Depreciable property. Form 1040 ez Adjustments to Basis If Deductions Are More Than Income How To Get Tax HelpLow Income Taxpayer Clinics Casualty A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Form 1040 ez A sudden event is one that is swift, not gradual or progressive. Form 1040 ez An unexpected event is one that is ordinarily unanticipated and unintended. Form 1040 ez 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. Form 1040 ez Generally, casualty losses are deductible during the taxable year that the loss occurred. Form 1040 ez See Table 3, later. Form 1040 ez Deductible losses. Form 1040 ez   Deductible casualty losses can result from a number of different causes, including the following. Form 1040 ez Car accidents (but see Nondeductible losses , next, for exceptions). Form 1040 ez Earthquakes. Form 1040 ez Fires (but see Nondeductible losses , next, for exceptions). Form 1040 ez Floods. Form 1040 ez Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster as discussed under Disaster Area Losses , later. Form 1040 ez Mine cave-ins. Form 1040 ez Shipwrecks. Form 1040 ez Sonic booms. Form 1040 ez Storms, including hurricanes and tornadoes. Form 1040 ez Terrorist attacks. Form 1040 ez Vandalism. Form 1040 ez Volcanic eruptions. Form 1040 ez Nondeductible losses. Form 1040 ez   A casualty loss is not deductible if the damage or destruction is caused by the following. Form 1040 ez Accidentally breaking articles such as glassware or china under normal conditions. Form 1040 ez A family pet (explained below). Form 1040 ez A fire if you willfully set it, or pay someone else to set it. Form 1040 ez A car accident if your willful negligence or willful act caused it. Form 1040 ez The same is true if the willful act or willful negligence of someone acting for you caused the accident. Form 1040 ez Progressive deterioration (explained below). Form 1040 ez However, see Special Procedure for Damage From Corrosive Drywall , later. Form 1040 ez Family pet. Form 1040 ez   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. Form 1040 ez Example. Form 1040 ez Your antique oriental rug was damaged by your new puppy before it was housebroken. Form 1040 ez Because the damage was not unexpected and unusual, the loss is not deductible as a casualty loss. Form 1040 ez Progressive deterioration. Form 1040 ez   Loss of property due to progressive deterioration is not deductible as a casualty loss. Form 1040 ez This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Form 1040 ez The following are examples of damage due to progressive deterioration. Form 1040 ez The steady weakening of a building due to normal wind and weather conditions. Form 1040 ez The deterioration and damage to a water heater that bursts. Form 1040 ez However, the rust and water damage to rugs and drapes caused by the bursting of a water heater does qualify as a casualty. Form 1040 ez Most losses of property caused by droughts. Form 1040 ez To be deductible, a drought-related loss generally must be incurred in a trade or business or in a transaction entered into for profit. Form 1040 ez Termite or moth damage. Form 1040 ez The damage or destruction of trees, shrubs, or other plants by a fungus, disease, insects, worms, or similar pests. Form 1040 ez However, a sudden destruction due to an unexpected or unusual infestation of beetles or other insects may result in a casualty loss. Form 1040 ez Special Procedure for Damage From Corrosive Drywall Under a special procedure, you can deduct the amounts you paid to repair damage to your home and household appliances due to corrosive drywall. Form 1040 ez Under this procedure, you treat the amounts paid for repairs as a casualty loss in the year of payment. Form 1040 ez For example, amounts you paid for repairs in 2013 are deductible on your 2013 tax return and amounts you paid for repairs in 2012 are deductible on your 2012 tax return. Form 1040 ez Note. Form 1040 ez If you paid for any repairs before 2013 and you choose to follow this special procedure, you can amend your return for the earlier year by filing Form 1040X, Amended U. Form 1040 ez S. Form 1040 ez Individual Income Tax Return, and attaching a completed Form 4684 for the appropriate year. Form 1040 ez Form 4684 for the appropriate year can be found at IRS. Form 1040 ez gov. Form 1040 ez Generally, Form 1040X must be filed within 3 years after the date the original return was filed or within 2 years after the date the tax was paid, whichever is later. Form 1040 ez Corrosive drywall. Form 1040 ez   For purposes of this special procedure, “corrosive drywall” means drywall that is identified as problem drywall under the two-step identification method published by the Consumer Product Safety Commission (CPSC) and the Department of Housing and Urban Development (HUD) in their interim guidance dated January 28, 2010, as revised by the CPSC and HUD. Form 1040 ez The revised identification guidance and remediation guidelines are available at www. Form 1040 ez cpsc. Form 1040 ez gov/Safety-Education/Safety-Education-Centers/Drywall. Form 1040 ez Special instructions for completing Form 4684. Form 1040 ez   If you choose to follow this special procedure, complete Form 4684, Section A, according to the instructions below. Form 1040 ez The IRS will not challenge your treatment of damage resulting from corrosive drywall as a casualty loss if you determine and report the loss as explained below. Form 1040 ez Top margin of Form 4684. Form 1040 ez   Enter “Revenue Procedure 2010-36”. Form 1040 ez Line 1. Form 1040 ez   Enter the information required by the line 1 instructions. Form 1040 ez Line 2. Form 1040 ez   Skip this line. Form 1040 ez Line 3. Form 1040 ez   Enter the amount of insurance or other reimbursements you received (including through litigation). Form 1040 ez If none, enter -0-. Form 1040 ez Lines 4–7. Form 1040 ez   Skip these lines. Form 1040 ez Line 8. Form 1040 ez   Enter the amount you paid to repair the damage to your home and household appliances due to corrosive drywall. Form 1040 ez Enter only the amounts you paid to restore your home to the condition existing immediately before the damage. Form 1040 ez Do not enter any amounts you paid for improvements or additions that increased the value of your home above its pre-loss value. Form 1040 ez If you replaced a household appliance instead of repairing it, enter the lesser of: The current cost to replace the original appliance, or The basis of the original appliance (generally its cost). Form 1040 ez Line 9. Form 1040 ez   If line 8 is more than line 3, do one of the following. Form 1040 ez If you have a pending claim for reimbursement (or you intend to pursue reimbursement), enter 75% of the difference between lines 3 and 8. Form 1040 ez If item (1) does not apply to you, enter the full amount of the difference between lines 3 and 8. Form 1040 ez If line 8 is less than or equal to line 3, you cannot claim a casualty loss deduction using this special procedure. Form 1040 ez    If you have a pending claim for reimbursement (or you intend to pursue reimbursement), you may have income or an additional deduction in a later tax year depending on the actual amount of reimbursement received. Form 1040 ez See Reimbursement Received After Deducting Loss, later. Form 1040 ez Lines 10–18. Form 1040 ez   Complete these lines according to the Instructions for Form 4684. Form 1040 ez Choosing not to follow this special procedure. Form 1040 ez   If you choose not to follow this special procedure, you are subject to all of the provisions that apply to the deductibility of casualty losses, and you must complete lines 1–9 according to the Instructions for Form 4684. Form 1040 ez This means, for example, that you must establish that the damage, destruction, or loss of property resulted from an identifiable event as defined earlier under Casualty . Form 1040 ez Furthermore, you must have proof that shows the following. Form 1040 ez The loss is properly deductible in the tax year you claimed it and not in some other year. Form 1040 ez See When To Report Gains and Losses , later. Form 1040 ez The amount of the claimed loss. Form 1040 ez See Proof of Loss , later. Form 1040 ez No claim for reimbursement of any portion of the loss exists for which there is a reasonable prospect of recovery. Form 1040 ez See When To Report Gains and Losses , later. Form 1040 ez Theft A theft is the taking and removing of money or property with the intent to deprive the owner of it. Form 1040 ez The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent. Form 1040 ez You do not need to show a conviction for theft. Form 1040 ez Theft includes the taking of money or property by the following means. Form 1040 ez Blackmail. Form 1040 ez Burglary. Form 1040 ez Embezzlement. Form 1040 ez Extortion. Form 1040 ez Kidnapping for ransom. Form 1040 ez Larceny. Form 1040 ez Robbery. Form 1040 ez The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Form 1040 ez Decline in market value of stock. Form 1040 ez   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. Form 1040 ez 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. Form 1040 ez You report a capital loss on Schedule D (Form 1040). Form 1040 ez For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Form 1040 ez Mislaid or lost property. Form 1040 ez    The simple disappearance of money or property is not a theft. Form 1040 ez 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. Form 1040 ez Sudden, unexpected, and unusual events were defined earlier under Casualty . Form 1040 ez Example. Form 1040 ez A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Form 1040 ez The diamond falls from the ring and is never found. Form 1040 ez The loss of the diamond is a casualty. Form 1040 ez Losses from Ponzi-type investment schemes. Form 1040 ez   The IRS has issued the following guidance to assist taxpayers who are victims of losses from Ponzi-type investment schemes: Revenue Ruling 2009-9, 2009-14 I. Form 1040 ez R. Form 1040 ez B. Form 1040 ez 735 (available at www. Form 1040 ez irs. Form 1040 ez gov/irb/2009-14_IRB/ar07. Form 1040 ez html). Form 1040 ez Revenue Procedure 2009-20, 2009-14 I. Form 1040 ez R. Form 1040 ez B. Form 1040 ez 749 (available at www. Form 1040 ez irs. Form 1040 ez gov/irb/2009-14_IRB/ar11. Form 1040 ez html). Form 1040 ez Revenue Procedure 2011-58, 2011-50 I. Form 1040 ez R. Form 1040 ez B. Form 1040 ez 847 (available at www. Form 1040 ez irs. Form 1040 ez gov/irb/2011-50_IRB/ar11. Form 1040 ez html). Form 1040 ez 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. Form 1040 ez Skip lines 19 to 27, but you must fill out Section B, lines 29 to 39, as appropriate. Form 1040 ez Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. Form 1040 ez You do not need to complete Appendix A. Form 1040 ez For more information, see the above revenue ruling and revenue procedures, and the Instructions for Form 4684. Form 1040 ez   If you choose not to use the procedures in Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58, you may claim your theft loss by filling out Section B, lines 19 to 39, as appropriate. Form 1040 ez Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. Form 1040 ez If you incurred this type of loss, you can choose one of the following ways to deduct the loss. Form 1040 ez As a casualty loss. Form 1040 ez As an ordinary loss. Form 1040 ez As a nonbusiness bad debt. Form 1040 ez Casualty loss or ordinary loss. Form 1040 ez   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. Form 1040 ez The choice generally is made on the return you file for that year and applies to all your losses on deposits for the year in that particular financial institution. Form 1040 ez 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. Form 1040 ez 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. Form 1040 ez Once you make the choice, you cannot change it without permission from the Internal Revenue Service. Form 1040 ez   If you claim an ordinary loss, report it as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Form 1040 ez The maximum amount you can claim is $20,000 ($10,000 if you are married filing separately) reduced by any expected state insurance proceeds. Form 1040 ez Your loss is subject to the 2%-of-adjusted-gross-income limit. Form 1040 ez You cannot choose to claim an ordinary loss if any part of the deposit is federally insured. Form 1040 ez Nonbusiness bad debt. Form 1040 ez   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. Form 1040 ez How to report. Form 1040 ez   The kind of deduction you choose for your loss on deposits determines how you report your loss. Form 1040 ez See Table 1. Form 1040 ez More information. Form 1040 ez   For more information, see Special Treatment for Losses on Deposits in Insolvent or Bankrupt Financial Institutions in the Instructions for Form 4684. Form 1040 ez Deducted loss recovered. Form 1040 ez   If you recover an amount you deducted as a loss in an earlier year, you may have to include the amount recovered in your income for the year of recovery. Form 1040 ez If any part of the original deduction did not reduce your tax in the earlier year, you do not have to include that part of the recovery in your income. Form 1040 ez For more information, see Recoveries in Publication 525. Form 1040 ez Proof of Loss To deduct a casualty or theft loss, you must be able to show that there was a casualty or theft. Form 1040 ez You also must be able to support the amount you take as a deduction. Form 1040 ez Casualty loss proof. Form 1040 ez   For a casualty loss, you should be able to show all of the following. Form 1040 ez The type of casualty (car accident, fire, storm, etc. Form 1040 ez ) and when it occurred. Form 1040 ez That the loss was a direct result of the casualty. Form 1040 ez 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. Form 1040 ez Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Form 1040 ez Theft loss proof. Form 1040 ez   For a theft loss, you should be able to show all of the following. Form 1040 ez When you discovered that your property was missing. Form 1040 ez That your property was stolen. Form 1040 ez That you were the owner of the property. Form 1040 ez Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Form 1040 ez    It is important that you have records that will prove your deduction. Form 1040 ez If you do not have the actual records to support your deduction, you can use other satisfactory evidence to support it. Form 1040 ez Figuring a Loss To determine your deduction for a casualty or theft loss, you must first figure your loss. Form 1040 ez Table 1. Form 1040 ez Reporting Loss on Deposits IF you choose to report the loss as a(n). Form 1040 ez . Form 1040 ez . Form 1040 ez   THEN report it on. Form 1040 ez . Form 1040 ez . Form 1040 ez casualty loss   Form 4684 and Schedule A  (Form 1040). Form 1040 ez ordinary loss   Schedule A (Form 1040). Form 1040 ez nonbusiness bad debt   Form 8949 and Schedule D (Form 1040). Form 1040 ez Amount of loss. Form 1040 ez   Figure the amount of your loss using the following steps. Form 1040 ez Determine your adjusted basis in the property before the casualty or theft. Form 1040 ez Determine the decrease in fair market value (FMV) of the property as a result of the casualty or theft. Form 1040 ez From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you received or expect to receive. Form 1040 ez 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. Form 1040 ez Gain from reimbursement. Form 1040 ez   If your reimbursement is more than your adjusted basis in the property, you have a gain. Form 1040 ez This is true even if the decrease in the FMV of the property is smaller than your adjusted basis. Form 1040 ez If you have a gain, you may have to pay tax on it, or you may be able to postpone reporting the gain. Form 1040 ez See Figuring a Gain , later. Form 1040 ez Business or income-producing property. Form 1040 ez   If you have business or income-producing property, such as rental property, and it is stolen or completely destroyed, the decrease in FMV is not considered. Form 1040 ez Your loss is figured as follows:   Your adjusted basis in the property     MINUS     Any salvage value     MINUS     Any insurance or other reimbursement you  receive or expect to receive   Loss of inventory. Form 1040 ez   There are two ways you can deduct a casualty or theft loss of inventory, including items you hold for sale to customers. Form 1040 ez   One way is to deduct the loss through the increase in the cost of goods sold by properly reporting your opening and closing inventories. Form 1040 ez Do not claim this loss again as a casualty or theft loss. Form 1040 ez If you take the loss through the increase in the cost of goods sold, include any insurance or other reimbursement you receive for the loss in gross income. Form 1040 ez   The other way is to deduct the loss separately. Form 1040 ez If you deduct it separately, eliminate the affected inventory items from the cost of goods sold by making a downward adjustment to opening inventory or purchases. Form 1040 ez Reduce the loss by the reimbursement you received. Form 1040 ez Do not include the reimbursement in gross income. Form 1040 ez If you do not receive the reimbursement by the end of the year, you may not claim a loss to the extent you have a reasonable prospect of recovery. Form 1040 ez Leased property. Form 1040 ez   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. Form 1040 ez Separate computations. Form 1040 ez   Generally, if a single casualty or theft involves more than one item of property, you must figure the loss on each item separately. Form 1040 ez Then combine the losses to determine the total loss from that casualty or theft. Form 1040 ez Exception for personal-use real property. Form 1040 ez   In figuring a casualty loss on personal-use real property, the entire property (including any improvements, such as buildings, trees, and shrubs) is treated as one item. Form 1040 ez Figure the loss using the smaller of the following. Form 1040 ez The decrease in FMV of the entire property. Form 1040 ez The adjusted basis of the entire property. Form 1040 ez   See Real property under Figuring the Deduction, later. Form 1040 ez 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. Form 1040 ez 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. Form 1040 ez FMV of stolen property. Form 1040 ez   The FMV of property immediately after a theft is considered to be zero because you no longer have the property. Form 1040 ez Example. Form 1040 ez Several years ago, you purchased silver dollars at face value for $150. Form 1040 ez This is your adjusted basis in the property. Form 1040 ez Your silver dollars were stolen this year. Form 1040 ez The FMV of the coins was $1,000 just before they were stolen, and insurance did not cover them. Form 1040 ez Your theft loss is $150. Form 1040 ez Recovered stolen property. Form 1040 ez   Recovered stolen property is your property that was stolen and later returned to you. Form 1040 ez 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. Form 1040 ez Use this amount to refigure your total loss for the year in which the loss was deducted. Form 1040 ez   If your refigured loss is less than the loss you deducted, you generally have to report the difference as income in the recovery year. Form 1040 ez But report the difference only up to the amount of the loss that reduced your tax. Form 1040 ez For more information on the amount to report, see Recoveries in Publication 525. Form 1040 ez 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. Form 1040 ez However, other measures also can be used to establish certain decreases. Form 1040 ez See Appraisal and Cost of cleaning up or making repairs , next. Form 1040 ez Appraisal. Form 1040 ez   An appraisal to determine the difference between the FMV of the property immediately before a casualty or theft and immediately afterwards should be made by a competent appraiser. Form 1040 ez The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Form 1040 ez This information is needed to limit any deduction to the actual loss resulting from damage to the property. Form 1040 ez   Several factors are important in evaluating the accuracy of an appraisal, including the following. Form 1040 ez The appraiser's familiarity with your property before and after the casualty or theft. Form 1040 ez The appraiser's knowledge of sales of comparable property in the area. Form 1040 ez The appraiser's knowledge of conditions in the area of the casualty. Form 1040 ez The appraiser's method of appraisal. Form 1040 ez 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. Form 1040 ez For more information on disasters, see Disaster Area Losses, later. Form 1040 ez Cost of cleaning up or making repairs. Form 1040 ez   The cost of repairing damaged property is not part of a casualty loss. Form 1040 ez Neither is the cost of cleaning up after a casualty. Form 1040 ez But you can use the cost of cleaning up or of making repairs after a casualty as a measure of the decrease in FMV if you meet all the following conditions. Form 1040 ez The repairs are actually made. Form 1040 ez The repairs are necessary to bring the property back to its condition before the casualty. Form 1040 ez The amount spent for repairs is not excessive. Form 1040 ez The repairs take care of the damage only. Form 1040 ez The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Form 1040 ez Landscaping. Form 1040 ez   The cost of restoring landscaping to its original condition after a casualty may indicate the decrease in FMV. Form 1040 ez You may be able to measure your loss by what you spend on the following. Form 1040 ez Removing destroyed or damaged trees and shrubs, minus any salvage you receive. Form 1040 ez Pruning and other measures taken to preserve damaged trees and shrubs. Form 1040 ez Replanting necessary to restore the property to its approximate value before the casualty. Form 1040 ez Car value. Form 1040 ez   Books issued by various automobile organizations that list your car may be useful in figuring the value of your car. Form 1040 ez You can use the books' retail values and modify them by factors such as the mileage and condition of your car to figure its value. Form 1040 ez 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. Form 1040 ez If your car is not listed in the books, determine its value from other sources. Form 1040 ez A dealer's offer for your car as a trade-in on a new car is not usually a measure of its true value. Form 1040 ez 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. Form 1040 ez Cost of protection. Form 1040 ez   The cost of protecting your property against a casualty or theft is not part of a casualty or theft loss. Form 1040 ez The amount you spend on insurance or to board up your house against a storm is not part of your loss. Form 1040 ez If the property is business property, these expenses are deductible as business expenses. Form 1040 ez   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. Form 1040 ez An example would be the cost of a dike to prevent flooding. Form 1040 ez Exception. Form 1040 ez   You cannot increase your basis in the property by, or deduct as a business expense, any expenditures you made with respect to qualified disaster mitigation payments (discussed later under Disaster Area Losses ). Form 1040 ez Related expenses. Form 1040 ez   The incidental expenses due to a casualty or theft, such as expenses for the treatment of personal injuries, for temporary housing, or for a rental car, are not part of your casualty or theft loss. Form 1040 ez However, they may be deductible as business expenses if the damaged or stolen property is business property. Form 1040 ez Replacement cost. Form 1040 ez   The cost of replacing stolen or destroyed property is not part of a casualty or theft loss. Form 1040 ez Example. Form 1040 ez You bought a new chair 4 years ago for $300. Form 1040 ez In April, a fire destroyed the chair. Form 1040 ez You estimate that it would cost $500 to replace it. Form 1040 ez If you had sold the chair before the fire, you estimate that you could have received only $100 for it because it was 4 years old. Form 1040 ez The chair was not insured. Form 1040 ez Your loss is $100, the FMV of the chair before the fire. Form 1040 ez It is not $500, the replacement cost. Form 1040 ez Sentimental value. Form 1040 ez   Do not consider sentimental value when determining your loss. Form 1040 ez 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. Form 1040 ez Decline in market value of property in or near casualty area. Form 1040 ez   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. Form 1040 ez You have a loss only for actual casualty damage to your property. Form 1040 ez However, if your home is in a federally declared disaster area, see Disaster Area Losses , later. Form 1040 ez Costs of photographs and appraisals. Form 1040 ez   Photographs taken after a casualty will be helpful in establishing the condition and value of the property after it was damaged. Form 1040 ez Photographs showing the condition of the property after it was repaired, restored, or replaced may also be helpful. Form 1040 ez   Appraisals are used to figure the decrease in FMV because of a casualty or theft. Form 1040 ez See Appraisal , earlier, under Figuring Decrease in FMV — Items To Consider, for information about appraisals. Form 1040 ez   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. Form 1040 ez They are expenses in determining your tax liability. Form 1040 ez You can claim these costs as a miscellaneous itemized deduction subject to the 2%-of-adjusted-gross-income limit on Schedule A (Form 1040). Form 1040 ez Adjusted Basis The measure of your investment in the property you own is its basis. Form 1040 ez For property you buy, your basis is usually its cost to you. Form 1040 ez For property you acquire in some other way, such as inheriting it, receiving it as a gift, or getting it in a nontaxable exchange, you must figure your basis in another way, as explained in Publication 551. Form 1040 ez If you inherited the property from someone who died in 2010 and the executor of the decedent's estate made the election to file Form 8939, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. Form 1040 ez Adjustments to basis. Form 1040 ez    While you own the property, various events may take place that change your basis. Form 1040 ez Some events, such as additions or permanent improvements to the property, increase basis. Form 1040 ez Others, such as earlier casualty losses and depreciation deductions, decrease basis. Form 1040 ez When you add the increases to the basis and subtract the decreases from the basis, the result is your adjusted basis. Form 1040 ez See Publication 551 for more information on figuring the basis of your property. Form 1040 ez Insurance and Other Reimbursements If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Form 1040 ez You do not have a casualty or theft loss to the extent you are reimbursed. Form 1040 ez If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Form 1040 ez You must reduce your loss even if you do not receive payment until a later tax year. Form 1040 ez See Reimbursement Received After Deducting Loss , later. Form 1040 ez Failure to file a claim for reimbursement. Form 1040 ez   If your property is covered by insurance, you must file a timely insurance claim for reimbursement of your loss. Form 1040 ez Otherwise, you cannot deduct this loss as a casualty or theft. Form 1040 ez The portion of the loss usually not covered by insurance (for example, a deductible) is not subject to this rule. Form 1040 ez Example. Form 1040 ez You have a car insurance policy with a $1,000 deductible. Form 1040 ez Because your insurance did not cover the first $1,000 of an auto collision, the $1,000 would be deductible (subject to the $100 and 10% rules, discussed later). Form 1040 ez This is true, even if you do not file an insurance claim, because your insurance policy would never have reimbursed you for the deductible. Form 1040 ez Types of Reimbursements The most common type of reimbursement is an insurance payment for your stolen or damaged property. Form 1040 ez Other types of reimbursements are discussed next. Form 1040 ez Also see the Instructions for Form 4684. Form 1040 ez Employer's emergency disaster fund. Form 1040 ez   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. Form 1040 ez Take into consideration only the amount you used to replace your destroyed or damaged property. Form 1040 ez Example. Form 1040 ez Your home was extensively damaged by a tornado. Form 1040 ez Your loss after reimbursement from your insurance company was $10,000. Form 1040 ez Your employer set up a disaster relief fund for its employees. Form 1040 ez Employees receiving money from the fund had to use it to rehabilitate or replace their damaged or destroyed property. Form 1040 ez You received $4,000 from the fund and spent the entire amount on repairs to your home. Form 1040 ez In figuring your casualty loss, you must reduce your unreimbursed loss ($10,000) by the $4,000 you received from your employer's fund. Form 1040 ez Your casualty loss before applying the deduction limits (discussed later) is $6,000. Form 1040 ez Cash gifts. Form 1040 ez   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. Form 1040 ez This applies even if you use the money to pay for repairs to property damaged in the disaster. Form 1040 ez Example. Form 1040 ez Your home was damaged by a hurricane. Form 1040 ez Relatives and neighbors made cash gifts to you that were excludable from your income. Form 1040 ez You used part of the cash gifts to pay for repairs to your home. Form 1040 ez There were no limits or restrictions on how you could use the cash gifts. Form 1040 ez It was an excludable gift, so the money you received and used to pay for repairs to your home does not reduce your casualty loss on the damaged home. Form 1040 ez Insurance payments for living expenses. Form 1040 ez   You do not reduce your casualty loss by insurance payments you receive to cover living expenses in either of the following situations. Form 1040 ez You lose the use of your main home because of a casualty. Form 1040 ez Government authorities do not allow you access to your main home because of a casualty or threat of one. Form 1040 ez Inclusion in income. Form 1040 ez   If these insurance payments are more than the temporary increase in your living expenses, you must include the excess in your income. Form 1040 ez Report this amount on Form 1040, line 21. Form 1040 ez However, if the casualty occurs in a federally declared disaster area, none of the insurance payments are taxable. Form 1040 ez See Qualified disaster relief payments , later, under Disaster Area Losses. Form 1040 ez   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. Form 1040 ez Actual living expenses are the reasonable and necessary expenses incurred because of the loss of your main home. Form 1040 ez Generally, these expenses include the amounts you pay for the following. Form 1040 ez Renting suitable housing. Form 1040 ez Transportation. Form 1040 ez Food. Form 1040 ez Utilities. Form 1040 ez Miscellaneous services. Form 1040 ez 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. Form 1040 ez Example. Form 1040 ez As a result of a fire, you vacated your apartment for a month and moved to a motel. Form 1040 ez You normally pay $525 a month for rent. Form 1040 ez None was charged for the month the apartment was vacated. Form 1040 ez Your motel rent for this month was $1,200. Form 1040 ez You normally pay $200 a month for food. Form 1040 ez Your food expenses for the month you lived in the motel were $400. Form 1040 ez You received $1,100 from your insurance company to cover your living expenses. Form 1040 ez You determine the payment you must include in income as follows. Form 1040 ez 1. Form 1040 ez Insurance payment for living expenses $1,100 2. Form 1040 ez Actual expenses during the month you are unable to use your home because of the fire $1,600   3. Form 1040 ez Normal living expenses 725   4. Form 1040 ez Temporary increase in living expenses: Subtract line 3  from line 2 875 5. Form 1040 ez Amount of payment includible in income: Subtract line 4 from line 1 $ 225 Tax year of inclusion. Form 1040 ez   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. Form 1040 ez Example. Form 1040 ez Your main home was destroyed by a tornado in August 2011. Form 1040 ez You regained use of your home in November 2012. Form 1040 ez The insurance payments you received in 2011 and 2012 were $1,500 more than the temporary increase in your living expenses during those years. Form 1040 ez You include this amount in income on your 2012 Form 1040. Form 1040 ez 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. Form 1040 ez Disaster relief. Form 1040 ez   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. Form 1040 ez Table 2. Form 1040 ez Deduction Limit Rules for Personal-Use and Employee Property       $100 Rule 10% Rule 2% Rule General Application You must reduce each casualty or theft loss by $100 when figuring your deduction. Form 1040 ez Apply this rule to personal-use property after you have figured the amount of your loss. Form 1040 ez You must reduce your total casualty or theft loss by 10% of your adjusted gross income. Form 1040 ez Apply this rule to personal-use property after you reduce each loss by $100 (the $100 rule). Form 1040 ez You must reduce your total casualty or theft loss by 2% of your adjusted gross income. Form 1040 ez Apply this rule to property you used in performing services as an employee after you have figured the amount of your loss and added it to your job expenses and most other miscellaneous itemized deductions. Form 1040 ez Single Event Apply this rule only once, even if many pieces of property are affected. Form 1040 ez Apply this rule only once, even if many pieces of property are affected. Form 1040 ez Apply this rule only once, even if many pieces of property are affected. Form 1040 ez More Than One Event Apply to the loss from each event. Form 1040 ez Apply to the total of all your losses from all events. Form 1040 ez Apply to the total of all your losses from all events. Form 1040 ez More Than One Person— With Loss From the   Same Event  (other than a married couple  filing jointly) Apply separately to each person. Form 1040 ez Apply separately to each person. Form 1040 ez Apply separately to each person. Form 1040 ez Married Couple—  With Loss From the  Same Event Filing Joint Return Apply as if you were one person. Form 1040 ez Apply as if you were one person. Form 1040 ez Apply as if you were one person. Form 1040 ez Filing Separate Return Apply separately to each spouse. Form 1040 ez Apply separately to each spouse. Form 1040 ez Apply separately to each spouse. Form 1040 ez More Than One Owner (other than a married couple filing jointly) Apply separately to each owner of jointly owned property. Form 1040 ez Apply separately to each owner of jointly owned property. Form 1040 ez Apply separately to each owner of jointly owned property. Form 1040 ez    Qualified disaster relief payments you receive for expenses you incurred as a result of a federally declared disaster, are not taxable income to you. Form 1040 ez For more information, see Qualified disaster relief payments under Disaster Area Losses, later. Form 1040 ez   Disaster unemployment assistance payments are unemployment benefits that are taxable. Form 1040 ez   Generally, disaster relief grants received under the Robert T. Form 1040 ez Stafford Disaster Relief and Emergency Assistance Act are not included in your income. Form 1040 ez See Federal disaster relief grants , later, under Disaster Area Losses. Form 1040 ez Loan proceeds. Form 1040 ez   Do not reduce your casualty loss by loan proceeds you use to rehabilitate or replace property on which you are claiming a casualty loss deduction. Form 1040 ez If you have a federal loan that is canceled (forgiven), see Federal loan canceled , later, under Disaster Area Losses. Form 1040 ez Reimbursement Received After Deducting Loss If you figured your casualty or theft loss using the amount of your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement. Form 1040 ez This section explains the adjustment you may have to make. Form 1040 ez Actual reimbursement less than expected. Form 1040 ez   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. Form 1040 ez Example. Form 1040 ez Your personal car had a FMV of $2,000 when it was destroyed in a collision with another car in 2012. Form 1040 ez The accident was due to the negligence of the other driver. Form 1040 ez At the end of 2012, there was a reasonable prospect that the owner of the other car would reimburse you in full. Form 1040 ez You did not have a deductible loss in 2012. Form 1040 ez In January 2013, the court awards you a judgment of $2,000. Form 1040 ez However, in July it becomes apparent that you will be unable to collect any amount from the other driver. Form 1040 ez Since this is your only casualty or theft loss, you can deduct the loss in 2013 that is figured by applying the Deduction Limits (discussed later). Form 1040 ez Actual reimbursement more than expected. Form 1040 ez   If you later receive more reimbursement than you expected, after you have claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. Form 1040 ez 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. Form 1040 ez You do not refigure your tax for the year you claimed the deduction. Form 1040 ez See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. Form 1040 ez Example. Form 1040 ez In 2012, a hurricane destroyed your motorboat. Form 1040 ez Your loss was $3,000, and you estimated that your insurance would cover $2,500 of it. Form 1040 ez You did not itemize deductions on your 2012 return, so you could not deduct the loss. Form 1040 ez When the insurance company reimburses you for the loss, you do not report any of the reimbursement as income. Form 1040 ez This is true even if it is for the full $3,000 because you did not deduct the loss on your 2012 return. Form 1040 ez The loss did not reduce your tax. Form 1040 ez    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. Form 1040 ez 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. Form 1040 ez Include the gain as ordinary income up to the amount of your deduction that reduced your tax for the earlier year. Form 1040 ez You may be able to postpone reporting any remaining gain as explained under Postponement of Gain, later. Form 1040 ez Actual reimbursement same as expected. Form 1040 ez   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. Form 1040 ez Example. Form 1040 ez In December 2013, you had a collision while driving your personal car. Form 1040 ez Repairs to the car cost $950. Form 1040 ez You had $100 deductible collision insurance. Form 1040 ez Your insurance company agreed to reimburse you for the rest of the damage. Form 1040 ez Because you expected a reimbursement from the insurance company, you did not have a casualty loss deduction in 2013. Form 1040 ez Due to the $100 rule, you cannot deduct the $100 you paid as the deductible. Form 1040 ez When you receive the $850 from the insurance company in 2014, do not report it as income. Form 1040 ez Deduction Limits After you have figured your casualty or theft loss, you must figure how much of the loss you can deduct. Form 1040 ez The deduction for casualty and theft losses of employee property and personal-use property is limited. Form 1040 ez A loss on employee property is subject to the 2% rule, discussed next. Form 1040 ez With certain exceptions, a loss on property you own for your personal use is subject to the $100 and 10% rules, discussed later. Form 1040 ez The 2%, $100, and 10% rules are also summarized in Table 2 . Form 1040 ez Losses on business property (other than employee property) and income-producing property are not subject to these rules. Form 1040 ez However, if your casualty or theft loss involved a home you used for business or rented out, your deductible loss may be limited. Form 1040 ez See the Instructions for Form 4684, Section B. Form 1040 ez If the casualty or theft loss involved property used in a passive activity, see Form 8582, Passive Activity Loss Limitations, and its instructions. Form 1040 ez 2% Rule The casualty and theft loss deduction for employee property, when added to your job expenses and most other miscellaneous itemized deductions on Schedule A (Form 1040) or Form 1040NR, Schedule A, must be reduced by 2% of your adjusted gross income. Form 1040 ez Employee property is property used in performing services as an employee. Form 1040 ez $100 Rule After you have figured your casualty or theft loss on personal-use property, as discussed earlier, you must reduce that loss by $100. Form 1040 ez This reduction applies to each total casualty or theft loss. Form 1040 ez It does not matter how many pieces of property are involved in an event. Form 1040 ez Only a single $100 reduction applies. Form 1040 ez Example. Form 1040 ez You have $750 deductible collision insurance on your car. Form 1040 ez The car is damaged in a collision. Form 1040 ez The insurance company pays you for the damage minus the $750 deductible. Form 1040 ez The amount of the casualty loss is based solely on the deductible. Form 1040 ez The casualty loss is $650 ($750 − $100) because the first $100 of a casualty loss on personal-use property is not deductible. Form 1040 ez Single event. Form 1040 ez   Generally, events closely related in origin cause a single casualty. Form 1040 ez 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. Form 1040 ez A single casualty may also damage two or more pieces of property, such as a hailstorm that damages both your home and your car parked in your driveway. Form 1040 ez Example 1. Form 1040 ez A thunderstorm destroyed your pleasure boat. Form 1040 ez You also lost some boating equipment in the storm. Form 1040 ez Your loss was $5,000 on the boat and $1,200 on the equipment. Form 1040 ez Your insurance company reimbursed you $4,500 for the damage to your boat. Form 1040 ez You had no insurance coverage on the equipment. Form 1040 ez Your casualty loss is from a single event and the $100 rule applies once. Form 1040 ez Figure your loss before applying the 10% rule (discussed later) as follows. Form 1040 ez     Boat Equipment 1. Form 1040 ez Loss $5,000 $1,200 2. Form 1040 ez Subtract insurance 4,500 -0- 3. Form 1040 ez Loss after reimbursement $ 500 $1,200 4. Form 1040 ez Total loss $1,700 5. Form 1040 ez Subtract $100 100 6. Form 1040 ez Loss before 10% rule $1,600 Example 2. Form 1040 ez Thieves broke into your home in January and stole a ring and a fur coat. Form 1040 ez You had a loss of $200 on the ring and $700 on the coat. Form 1040 ez This is a single theft. Form 1040 ez The $100 rule applies to the total $900 loss. Form 1040 ez Example 3. Form 1040 ez In September, hurricane winds blew the roof off your home. Form 1040 ez Flood waters caused by the hurricane further damaged your home and destroyed your furniture and personal car. Form 1040 ez This is considered a single casualty. Form 1040 ez The $100 rule is applied to your total loss from the flood waters and the wind. Form 1040 ez More than one loss. Form 1040 ez   If you have more than one casualty or theft loss during your tax year, you must reduce each loss by $100. Form 1040 ez Example. Form 1040 ez Your family car was damaged in an accident in January. Form 1040 ez Your loss after the insurance reimbursement was $75. Form 1040 ez In February, your car was damaged in another accident. Form 1040 ez This time your loss after the insurance reimbursement was $90. Form 1040 ez Apply the $100 rule to each separate casualty loss. Form 1040 ez Since neither accident resulted in a loss of over $100, you are not entitled to any deduction for these accidents. Form 1040 ez More than one person. Form 1040 ez   If two or more individuals (other than a husband and wife filing a joint return) have losses from the same casualty or theft, the $100 rule applies separately to each individual. Form 1040 ez Example. Form 1040 ez A fire damaged your house and also damaged the personal property of your house guest. Form 1040 ez You must reduce your loss by $100. Form 1040 ez Your house guest must reduce his or her loss by $100. Form 1040 ez Married taxpayers. Form 1040 ez   If you and your spouse file a joint return, you are treated as one individual in applying the $100 rule. Form 1040 ez It does not matter whether you own the property jointly or separately. Form 1040 ez   If you and your spouse have a casualty or theft loss and you file separate returns, each of you must reduce your loss by $100. Form 1040 ez This is true even if you own the property jointly. Form 1040 ez If one spouse owns the property, only that spouse can figure a loss deduction on a separate return. Form 1040 ez   If the casualty or theft loss is on property you own as tenants by the entirety, each of you can figure your deduction on only one-half of the loss on separate returns. Form 1040 ez Neither of you can figure your deduction on the entire loss on a separate return. Form 1040 ez Each of you must reduce the loss by $100. Form 1040 ez More than one owner. Form 1040 ez   If two or more individuals (other than a husband and wife filing a joint return) have a loss on property jointly owned, the $100 rule applies separately to each. Form 1040 ez For example, if two sisters live together in a home they own jointly and they have a casualty loss on the home, the $100 rule applies separately to each sister. Form 1040 ez 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. Form 1040 ez Apply this rule after you reduce each loss by $100. Form 1040 ez For more information, see the Form 4684 instructions. Form 1040 ez If you have both gains and losses from casualties or thefts, see Gains and losses , later in this discussion. Form 1040 ez Example. Form 1040 ez In June, you discovered that your house had been burglarized. Form 1040 ez Your loss after insurance reimbursement was $2,000. Form 1040 ez Your adjusted gross income for the year you discovered the theft is $29,500. Form 1040 ez Figure your theft loss as follows. Form 1040 ez 1. Form 1040 ez Loss after insurance $2,000 2. Form 1040 ez Subtract $100 100 3. Form 1040 ez Loss after $100 rule $1,900 4. Form 1040 ez Subtract 10% of $29,500 AGI $2,950 5. Form 1040 ez Theft loss deduction $-0- You do not have a theft loss deduction because your loss ($1,900) is less than 10% of your adjusted gross income ($2,950). Form 1040 ez More than one loss. Form 1040 ez   If you have more than one casualty or theft loss during your tax year, reduce each loss by any reimbursement and by $100. Form 1040 ez Then you must reduce the total of all your losses by 10% of your adjusted gross income. Form 1040 ez Example. Form 1040 ez In March, you had a car accident that totally destroyed your car. Form 1040 ez You did not have collision insurance on your car, so you did not receive any insurance reimbursement. Form 1040 ez Your loss on the car was $1,800. Form 1040 ez In November, a fire damaged your basement and totally destroyed the furniture, washer, dryer, and other items you had stored there. Form 1040 ez Your loss on the basement items after reimbursement was $2,100. Form 1040 ez Your adjusted gross income for the year that the accident and fire occurred is $25,000. Form 1040 ez You figure your casualty loss deduction as follows. Form 1040 ez     Car Basement 1. Form 1040 ez Loss $1,800 $2,100 2. Form 1040 ez Subtract $100 per incident 100 100 3. Form 1040 ez Loss after $100 rule $1,700 $2,000 4. Form 1040 ez Total loss $3,700 5. Form 1040 ez Subtract 10% of $25,000 AGI 2,500 6. Form 1040 ez Casualty loss deduction $1,200 Married taxpayers. Form 1040 ez   If you and your spouse file a joint return, you are treated as one individual in applying the 10% rule. Form 1040 ez It does not matter if you own the property jointly or separately. Form 1040 ez   If you file separate returns, the 10% rule applies to each return on which a loss is claimed. Form 1040 ez More than one owner. Form 1040 ez   If two or more individuals (other than husband and wife filing a joint return) have a loss on property that is owned jointly, the 10% rule applies separately to each. Form 1040 ez Gains and losses. Form 1040 ez   If you have casualty or theft gains as well as losses to personal-use property, you must compare your total gains to your total losses. Form 1040 ez 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. Form 1040 ez Casualty or theft gains do not include gains you choose to postpone. Form 1040 ez See Postponement of Gain, later. Form 1040 ez Losses more than gains. Form 1040 ez   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. Form 1040 ez The rest, if any, is your deductible loss from personal-use property. Form 1040 ez Example. Form 1040 ez Your theft loss after reducing it by reimbursements and by $100 is $2,700. Form 1040 ez Your casualty gain is $700. Form 1040 ez Your loss is more than your gain, so you must reduce your $2,000 net loss ($2,700 − $700) by 10% of your adjusted gross income. Form 1040 ez Gains more than losses. Form 1040 ez   If your recognized gains are more than your losses, subtract your losses from your gains. Form 1040 ez The difference is treated as a capital gain and must be reported on Schedule D (Form 1040). Form 1040 ez The 10% rule does not apply to your gains. Form 1040 ez Example. Form 1040 ez Your theft loss is $600 after reducing it by reimbursements and by $100. Form 1040 ez Your casualty gain is $1,600. Form 1040 ez Because your gain is more than your loss, you must report the $1,000 net gain ($1,600 − $600) on Schedule D (Form 1040). Form 1040 ez More information. Form 1040 ez   For information on how to figure recognized gains, see Figuring a Gain , later. Form 1040 ez Figuring the Deduction Generally, you must figure your loss separately for each item stolen, damaged, or destroyed. Form 1040 ez However, a special rule applies to real property you own for personal use. Form 1040 ez Real property. Form 1040 ez   In figuring a loss to real estate you own for personal use, all improvements (such as buildings and ornamental trees and the land containing the improvements) are considered together. Form 1040 ez Example 1. Form 1040 ez In June, a fire destroyed your lakeside cottage, which cost $144,800 (including $14,500 for the land) several years ago. Form 1040 ez (Your land was not damaged. Form 1040 ez ) This was your only casualty or theft loss for the year. Form 1040 ez The FMV of the property immediately before the fire was $180,000 ($145,000 for the cottage and $35,000 for the land). Form 1040 ez The FMV immediately after the fire was $35,000 (value of the land). Form 1040 ez You collected $130,000 from the insurance company. Form 1040 ez Your adjusted gross income for the year the fire occurred is $80,000. Form 1040 ez Your deduction for the casualty loss is $6,700, figured in the following manner. Form 1040 ez 1. Form 1040 ez Adjusted basis of the entire property (cost in this example) $144,800 2. Form 1040 ez FMV of entire property  before fire $180,000 3. Form 1040 ez FMV of entire property after fire 35,000 4. Form 1040 ez Decrease in FMV of entire property (line 2 − line 3) $145,000 5. Form 1040 ez Loss (smaller of line 1 or line 4) $144,800 6. Form 1040 ez Subtract insurance 130,000 7. Form 1040 ez Loss after reimbursement $14,800 8. Form 1040 ez Subtract $100 100 9. Form 1040 ez Loss after $100 rule $14,700 10. Form 1040 ez Subtract 10% of $80,000 AGI 8,000 11. Form 1040 ez Casualty loss deduction $ 6,700 Example 2. Form 1040 ez You bought your home a few years ago. Form 1040 ez You paid $150,000 ($10,000 for the land and $140,000 for the house). Form 1040 ez You also spent an additional $2,000 for landscaping. Form 1040 ez This year a fire destroyed your home. Form 1040 ez The fire also damaged the shrubbery and trees in your yard. Form 1040 ez The fire was your only casualty or theft loss this year. Form 1040 ez Competent appraisers valued the property as a whole at $175,000 before the fire, but only $50,000 after the fire. Form 1040 ez Shortly after the fire, the insurance company paid you $95,000 for the loss. Form 1040 ez Your adjusted gross income for this year is $70,000. Form 1040 ez You figure your casualty loss deduction as follows. Form 1040 ez 1. Form 1040 ez Adjusted basis of the entire property (cost of land, building, and landscaping) $152,000 2. Form 1040 ez FMV of entire property  before fire $175,000 3. Form 1040 ez FMV of entire property after fire 50,000 4. Form 1040 ez Decrease in FMV of entire property (line 2 − line 3) $125,000 5. Form 1040 ez Loss (smaller of line 1 or line 4) $125,000 6. Form 1040 ez Subtract insurance 95,000 7. Form 1040 ez Loss after reimbursement $30,000 8. Form 1040 ez Subtract $100 100 9. Form 1040 ez Loss after $100 rule $29,900 10. Form 1040 ez Subtract 10% of $70,000 AGI 7,000 11. Form 1040 ez Casualty loss deduction $ 22,900 Personal property. Form 1040 ez   Personal property is any property that is not real property. Form 1040 ez 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. Form 1040 ez Then combine these separate losses to figure the total loss. Form 1040 ez Reduce the total loss by $100 and 10% of your adjusted gross income to figure the loss deduction. Form 1040 ez Example 1. Form 1040 ez In August, a storm destroyed your pleasure boat, which cost $18,500. Form 1040 ez This was your only casualty or theft loss for the year. Form 1040 ez Its FMV immediately before the storm was $17,000. Form 1040 ez You had no insurance, but were able to salvage the motor of the boat and sell it for $200. Form 1040 ez Your adjusted gross income for the year the casualty occurred is $70,000. Form 1040 ez Although the motor was sold separately, it is part of the boat and not a separate item of property. Form 1040 ez You figure your casualty loss deduction as follows. Form 1040 ez 1. Form 1040 ez Adjusted basis (cost in this example) $18,500 2. Form 1040 ez FMV before storm $17,000 3. Form 1040 ez FMV after storm 200 4. Form 1040 ez Decrease in FMV  (line 2 − line 3) $16,800 5. Form 1040 ez Loss (smaller of line 1 or line 4) $16,800 6. Form 1040 ez Subtract insurance -0- 7. Form 1040 ez Loss after reimbursement $16,800 8. Form 1040 ez Subtract $100 100 9. Form 1040 ez Loss after $100 rule $16,700 10. Form 1040 ez Subtract 10% of $70,000 AGI 7,000 11. Form 1040 ez Casualty loss deduction $ 9,700 Example 2. Form 1040 ez In June, you were involved in an auto accident that totally destroyed your personal car and your antique pocket watch. Form 1040 ez You had bought the car for $30,000. Form 1040 ez The FMV of the car just before the accident was $17,500. Form 1040 ez Its FMV just after the accident was $180 (scrap value). Form 1040 ez Your insurance company reimbursed you $16,000. Form 1040 ez Your watch was not insured. Form 1040 ez You had purchased it for $250. Form 1040 ez Its FMV just before the accident was $500. Form 1040 ez Your adjusted gross income for the year the accident occurred is $97,000. Form 1040 ez Your casualty loss deduction is zero, figured as follows. Form 1040 ez     Car Watch 1. Form 1040 ez Adjusted basis (cost) $30,000 $250 2. Form 1040 ez FMV before accident $17,500 $500 3. Form 1040 ez FMV after accident 180 -0- 4. Form 1040 ez Decrease in FMV (line 2 − line 3) $17,320 $500 5. Form 1040 ez Loss (smaller of line 1 or line 4) $17,320 $250 6. Form 1040 ez Subtract insurance 16,000 -0- 7. Form 1040 ez Loss after reimbursement $1,320 $250 8. Form 1040 ez Total loss $1,570 9. Form 1040 ez Subtract $100 100 10. Form 1040 ez Loss after $100 rule $1,470 11. Form 1040 ez Subtract 10% of $97,000 AGI 9,700 12. Form 1040 ez Casualty loss deduction $ -0- Both real and personal properties. Form 1040 ez   When a casualty involves both real and personal properties, you must figure the loss separately for each type of property. Form 1040 ez However, you apply a single $100 reduction to the total loss. Form 1040 ez Then, you apply the 10% rule to figure the casualty loss deduction. Form 1040 ez Example. Form 1040 ez In July, a hurricane damaged your home, which cost you $164,000 including land. Form 1040 ez The FMV of the property (both building and land) immediately before the storm was $170,000 and its FMV immediately after the storm was $100,000. Form 1040 ez Your household furnishings were also damaged. Form 1040 ez You separately figured the loss on each damaged household item and arrived at a total loss of $600. Form 1040 ez You collected $50,000 from the insurance company for the damage to your home, but your household furnishings were not insured. Form 1040 ez Your adjusted gross income for the year the hurricane occurred is $65,000. Form 1040 ez You figure your casualty loss deduction from the hurricane in the following manner. Form 1040 ez 1. Form 1040 ez Adjusted basis of real property (cost in this example) $164,000 2. Form 1040 ez FMV of real property before hurricane $170,000 3. Form 1040 ez FMV of real property after hurricane 100,000 4. Form 1040 ez Decrease in FMV of real property (line 2 − line 3) $70,000 5. Form 1040 ez Loss on real property (smaller of line 1 or line 4) $70,000 6. Form 1040 ez Subtract insurance 50,000 7. Form 1040 ez Loss on real property after reimbursement $20,000 8. Form 1040 ez Loss on furnishings $600 9. Form 1040 ez Subtract insurance -0- 10. Form 1040 ez Loss on furnishings after reimbursement $600 11. Form 1040 ez Total loss (line 7 plus line 10) $20,600 12. Form 1040 ez Subtract $100 100 13. Form 1040 ez Loss after $100 rule $20,500 14. Form 1040 ez Subtract 10% of $65,000 AGI 6,500 15. Form 1040 ez Casualty loss deduction $14,000 Property used partly for business and partly for personal purposes. Form 1040 ez   When property is used partly for personal purposes and partly for business or income-producing purposes, the casualty or theft loss deduction must be figured separately for the personal-use portion and for the business or income-producing portion. Form 1040 ez You must figure each loss separately because the losses attributed to these two uses are figured in two different ways. Form 1040 ez When figuring each loss, allocate the total cost or basis, the FMV before and after the casualty or theft loss, and the insurance or other reimbursement between the business and personal use of the property. Form 1040 ez The $100 rule and the 10% rule apply only to the casualty or theft loss on the personal-use portion of the property. Form 1040 ez Example. Form 1040 ez You own a building that you constructed on leased land. Form 1040 ez You use half of the building for your business and you live in the other half. Form 1040 ez The cost of the building was $400,000. Form 1040 ez You made no further improvements or additions to it. Form 1040 ez A flood in March damaged the entire building. Form 1040 ez The FMV of the building was $380,000 immediately before the flood and $320,000 afterwards. Form 1040 ez Your insurance company reimbursed you $40,000 for the flood damage. Form 1040 ez Depreciation on the business part of the building before the flood totaled $24,000. Form 1040 ez Your adjusted gross income for the year the flood occurred is $125,000. Form 1040 ez You have a deductible business casualty loss of $10,000. Form 1040 ez You do not have a deductible personal casualty loss because of the 10% rule. Form 1040 ez You figure your loss as follows. Form 1040 ez     Business   Personal     Part   Part 1. Form 1040 ez Cost (total $400,000) $200,000   $200,000 2. Form 1040 ez Subtract depreciation 24,000   -0- 3. Form 1040 ez Adjusted basis $176,000   $200,000 4. Form 1040 ez FMV before flood (total $380,000) $190,000   $190,000 5. Form 1040 ez FMV after flood (total $320,000) 160,000   160,000 6. Form 1040 ez Decrease in FMV  (line 4 − line 5) $30,000   $30,000 7. Form 1040 ez Loss (smaller of line 3 or line 6) $30,000   $30,000 8. Form 1040 ez Subtract insurance 20,000   20,000 9. Form 1040 ez Loss after reimbursement $10,000   $10,000 10. Form 1040 ez Subtract $100 on personal-use property -0-   100 11. Form 1040 ez Loss after $100 rule $10,000   $9,900 12. Form 1040 ez Subtract 10% of $125,000 AGI on personal-use property -0-   12,500 13. Form 1040 ez Deductible business loss $10,000     14. Form 1040 ez Deductible personal loss $-0- Figuring a Gain If you receive an insurance payment or other reimbursement that is more than your adjusted basis in the destroyed, damaged, or stolen property, you have a gain from the casualty or theft. Form 1040 ez Your gain is figured as follows. Form 1040 ez The amount you receive (discussed next), minus Your adjusted basis in the property at the time of the casualty or theft. Form 1040 ez See Adjusted Basis , earlier, for information on adjusted basis. Form 1040 ez Even if the decrease in FMV of your property is smaller than the adjusted basis of your property, use your adjusted basis to figure the gain. Form 1040 ez Amount you receive. Form 1040 ez   The amount you receive includes any money plus the value of any property you receive minus any expenses you have in obtaining reimbursement. Form 1040 ez It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. Form 1040 ez Example. Form 1040 ez A hurricane destroyed your personal residence and the insurance company awarded you $145,000. Form 1040 ez You received $140,000 in cash. Form 1040 ez The remaining $5,000 was paid directly to the holder of a mortgage on the property. Form 1040 ez The amount you received includes the $5,000 reimbursement paid on the mortgage. Form 1040 ez Main home destroyed. Form 1040 ez   If you have a gain because your main home was destroyed, you generally can exclude the gain from your income as if you had sold or exchanged your home. Form 1040 ez You may be able to exclude up to $250,000 of the gain (up to $500,000 if married filing jointly). Form 1040 ez To exclude a gain, you generally must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date it was destroyed. Form 1040 ez For information on this exclusion, see Publication 523. Form 1040 ez If your gain is more than the amount you can exclude, but you buy replacement property, you may be able to postpone reporting the excess gain. Form 1040 ez See Postponement of Gain , later. Form 1040 ez Reporting a gain. Form 1040 ez   You generally must report your gain as income in the year you receive the reimbursement. Form 1040 ez However, you do not have to report your gain if you meet certain requirements and choose to postpone reporting the gain according to the rules explained under Postponement of Gain, next. Form 1040 ez   For information on how to report a gain, see How To Report Gains and Losses , later. Form 1040 ez    If you have a casualty or theft gain on personal-use property that you choose to postpone reporting (as explained next) and you also have another casualty or theft loss on personal-use property, do not consider the gain you are postponing when figuring your casualty or theft loss deduction. Form 1040 ez See 10% Rule under Deduction Limits, earlier. Form 1040 ez Postponement of Gain Do not report a gain if you receive reimbursement in the form of property similar or related in service or use to the destroyed or stolen property. Form 1040 ez Your basis in the new property is generally the same as your adjusted basis in the property it replaces. Form 1040 ez You must ordinarily report the gain on your stolen or destroyed property if you receive money or unlike property as reimbursement. Form 1040 ez However, you can choose to postpone reporting the gain if you purchase property that is similar or related in service or use to the stolen or destroyed property within a specified replacement period, discussed later. Form 1040 ez You also can choose to postpone reporting the gain if you purchase a controlling interest (at least 80%) in a corporation owning property that is similar or related in service or use to the property. Form 1040 ez See Controlling interest in a corporation , later. Form 1040 ez If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. Form 1040 ez To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. Form 1040 ez If the cost of the replacement property is less than the reimbursement, you must include the gain in your income up to the amount of the unspent reimbursement. Form 1040 ez Example. Form 1040 ez In 1970, you bought an oceanfront cottage for your personal use at a cost of $18,000. Form 1040 ez You made no further improvements or additions to it. Form 1040 ez When a storm destroyed the cottage this January, the cottage was worth $250,000. Form 1040 ez You received $146,000 from the insurance company in March. Form 1040 ez You had a gain of $128,000 ($146,000 − $18,000). Form 1040 ez You spent $144,000 to rebuild the cottage. Form 1040 ez Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. Form 1040 ez Buying replacement property from a related person. Form 1040 ez   You cannot postpone reporting a gain from a casualty or theft if you buy the replacement property from a related person (discussed later). Form 1040 ez This rule applies to the following taxpayers. Form 1040 ez C corporations. Form 1040 ez Partnerships in which more than 50% of the capital or profits interests is owned by C corporations. Form 1040 ez All others (including individuals, partnerships — other than those in (2) — and S corporations) if the total realized gain for the tax year on all destroyed or stolen properties on which there are realized gains is more than $100,000. Form 1040 ez For casualties and thefts described in (3) above, gains cannot be offset by any losses when determining whether the total gain is more than $100,000. Form 1040 ez If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. Form 1040 ez If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. Form 1040 ez Exception. Form 1040 ez   This rule does not apply if the related person acquired the property from an unrelated person within the period of time allowed for replacing the destroyed or stolen property. Form 1040 ez Related persons. Form 1040 ez   Under this rule, related persons include, for example, a parent and child, a brother and sister, a corporation and an individual who owns more than 50% of its outstanding stock, and two partnerships in which the same C corporations own more than 50% of the capital or profits interests. Form 1040 ez For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Form 1040 ez Death of a taxpayer. Form 1040 ez   If a taxpayer dies after having a gain but before buying replacement property, the gain must be reported for the year in which the decedent realized the gain. Form 1040 ez The executor of the estate or the person succeeding to the funds from the casualty or theft cannot postpone reporting the gain by buying replacement property. Form 1040 ez Replacement Property You must buy replacement property for the specific purpose of replacing your destroyed or stolen property. Form 1040 ez Property you acquire as a gift or inheritance does not qualify. Form 1040 ez You do not have to use the same funds you receive as