It is not unknown for people to suffer a loss in the form of theft and casualty for their personal properties. If you are one of them, you can claim the same as itemized deduction for your tax returns. To do so, you need to fill up the Form 4684 to understand how much of yours loses you can report and then mention the same in the Schedule A of the Form 1040.
It is important to note that you can claim only for those losses that are not covered or reimbursed by any insurance company. Also, in order to qualify for the deductions, your loss should amount to more than 10% of your adjusted gross income. You cannot claim a deduction otherwise. Read More
This article is part 2 of a three-part series which discusses how to determine the amount of the loss for personal use and income producing property, amount deductible, and tax year for the deduction (part 1 can be found here). We will discuss gains, including deferring the gain for income producing property by purchasing replacement property-qualifying property, time period for replacement, realized and recognized gain, and basis of new property in the final installment.
Generally, you may claim an itemized deduction for any casualty and theft losses you suffered, but you must first determine the amount of the loss, and then figure the amount of the deduction.
Determining the amount of the loss
To determine the amount of loss you need to do two calculations:
• You first must calculate the adjusted basis of your property. The adjusted basis is usually the original cost of the property plus the cost of improvements, minus depreciation, and any previous casualty losses claimed.
• You must then calculate the decrease in fair market value of the property caused by the Read More