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            Department of the Treasury                        Contents
            Internal Revenue Service
                                                              Future Developments . . . . . . . . . . . . . . . . . . . . . . .             1
                                                              What’s New    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
Publication 547
Cat. No. 15090K                                               Reminders     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
                                                              Introduction    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
                                                              Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3
Casualties, 
                                                              Theft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Disasters, and                                                Loss on Deposits . . . . . . . . . . . . . . . . . . . . . . . . . .          7
                                                              Proof of Loss     . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7
Thefts                                                        Figuring a Loss       . . . . . . . . . . . . . . . . . . . . . . . . . . .   7
For use in preparing                                          Deduction Limits        . . . . . . . . . . . . . . . . . . . . . . . . .     14
                                                              Figuring a Gain     . . . . . . . . . . . . . . . . . . . . . . . . . . .     18
2023 Returns
                                                              When To Report Gains and Losses                     . . . . . . . . . . .     22
                                                              Disaster Area Losses . . . . . . . . . . . . . . . . . . . . . .              22
                                                              How To Report Gains and Losses                    . . . . . . . . . . . .     27
                                                              How To Get Tax Help         . . . . . . . . . . . . . . . . . . . . . . .     27
                                                              Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     31

                                                              Future Developments
                                                              For  the  latest  information  about  developments  related  to 
                                                              Pub.  547,  such  as  legislation  enacted  after  it  was 
                                                              published, go to IRS.gov/Pub547.

                                                              What’s New
                                                              Disaster-related  benefits  extension.                  At  the  time  this 
                                                              publication was going to print, new legislation was being 
                                                              considered that would extend the rules for the treatment of 
                                                              certain disaster-related personal casualty losses.
                                                              To  see  if  this  legislation  was  enacted  and  how  these 
                                                              rules would be extended, go to IRS.gov/Pub547.

                                                              Reminders
                                                              Special  rules  and  return  procedures  expanded  for 
                                                              claiming qualified disaster-related personal casualty 
                                                              losses. The  Taxpayer  Certainty  and  Disaster  Tax  Relief 
                                                              Act of 2019 and the Taxpayer Certainty and Disaster Tax 
                                                              Relief Act of 2020 expanded the special rules and return 
                                                              procedures  for  personal  casualty  losses  attributable  to 
                                                              certain major federal disasters that were declared in 2018, 
                                                              2019, and 2020.
Get forms and other information faster and easier at:         Qualified  disaster  losses  in  those  tax  years  may  be 
• IRS.gov (English)         • IRS.gov/Korean (한국어)            claimed on Form 4684. See             Qualified disaster loss, later, 
• IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский) 
• IRS.gov/Chinese (中文)      • IRS.gov/Vietnamese (Tiếng Việt) for more information.

Jan 10, 2024

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If applicable, you may have to file an amended re- Photographs of missing children. The Internal Reve-
TIP turn on Form 1040-X to claim these benefits on nue Service is a proud partner with the National Center for
your 2018, 2019, and/or 2020 returns. Form Missing & Exploited Children® (NCMEC). Photographs of
1040-X is available at IRS.gov/Form1040X. Prior revisions missing children selected by the Center may appear in
of Form 4684 are available at IRS.gov/Form4684. See this publication on pages that would otherwise be blank.
How to report the loss on Form 1040-X, later. You can help bring these children home by looking at the
photographs and calling 1-800-THE-LOST
Limitation on personal casualty and theft losses. For (1-800-843-5678) if you recognize a child.
tax years 2018 through 2025, if you are an individual,
casualty or theft losses of personal-use property are de-
ductible only if the loss is attributable to a federally de-
clared disaster. Introduction
Personal casualty and theft losses attributable to a fed- This publication explains the tax treatment of casualties,
erally declared disaster are subject to the $100 per casu- thefts, and losses on deposits. A casualty occurs when
alty and 10% of your adjusted gross income (AGI) reduc- your property is damaged as a result of a disaster such as
tions unless they are attributable to a qualified disaster a storm, fire, car accident, or similar event. A theft occurs
loss. when someone steals your property. A loss on deposits
Personal casualty and theft losses attributable to a occurs when your financial institution becomes insolvent
qualified disaster loss are not subject to the 10% of the or bankrupt.
AGI reduction and the $100 reduction is increased to This publication discusses the following topics.
$500.
• Definitions of a casualty, theft, and loss on deposits.
An exception to the rule above, limiting the personal
casualty and theft loss deduction to losses attributable to • How to figure the amount of your gain or loss.
a federally declared disaster, applies if you have personal • How to treat insurance and other reimbursements you
casualty gains for the tax year. For more information, see receive.
Deduction Limits, later.
• The deduction limits.
Special rules for capital gains invested in qualified
opportunity funds (QOFs). If you have a capital gain for • When and how to report a casualty or theft.
2023, you can invest that gain into a QOF and elect to de- • The special rules for disaster area losses.
fer part or all of the gain that you would otherwise include
in income until December 31, 2026. You may also be able Forms to file. Generally, when you have a casualty or
to permanently exclude gain from the sale or exchange of theft, you have to file Form 4684. You may also have to file
an investment in a QOF if the investment is held for at one or more of the following forms.
least 10 years. For information about how to elect to use
these special rules, see the Instructions for Form 8949, • Schedule A (Form 1040).
Sales and Other Dispositions of Capital Assets. For addi- • Schedule A (Form 1040-NR) (for nonresident aliens).
tional information, see Opportunity Zones Frequently Schedule D (Form 1040).
•
Asked Questions on IRS.gov.
• Form 4797.
Deferral of gain invested in a QOF. If you realize a For details on which form to use, see How To Report
gain from an actual, or deemed, sale or exchange with an Gains and Losses, later.
unrelated person and during the 180-day period beginning
on the date realizing the gain, invested an amount of the Condemnations. For information on condemnations of
gain in a QOF, you may be able to elect to temporarily de- property, see Involuntary Conversions in chapter 1 of Pub.
fer part or all of the gain that would otherwise be included 544, Sales and Other Dispositions of Assets.
in income. If you make the election, the gain is included in
taxable income only to the extent, if any, that the amount Workbooks for casualties and thefts. Pub. 584, Casu-
of realized gain exceeds the aggregate amount invested in alty, Disaster, and Theft Loss Workbook (Personal-Use
a QOF during the 180-day period beginning on the date Property), is available to help you make a list of your sto-
the gain was realized. len or damaged personal-use property and figure your
loss. It includes schedules to help you figure the loss on
How to report. Report the gain as it would otherwise your home and its contents, and your motor vehicles.
be reported if you were not making the election. Report Pub. 584-B, Business Casualty, Disaster, and Theft
the election for the amount invested in a QOF on Form Loss Workbook, is available to help you make a list of your
8949. See the Instructions for Form 8949 for information stolen or damaged business or income-producing prop-
on how to make the election. You will need to attach Form erty and figure your loss.
8997 annually until you dispose of the QOF investment.
See the Form 8997 instructions for more information. Comments and suggestions. We welcome your com-
QOF investment. If you held a qualified investment in a ments about this publication and suggestions for future
QOF at any time during the year, you must file your return editions.
with Form 8997 attached. See the Form 8997 instructions.

2 Publication 547 (2023)

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You  can  send  us  comments  through                                                                 IRS.gov/
FormComments. Or, you can write to the Internal Revenue 
Service,  Tax  Forms  and  Publications,  1111  Constitution                                                              Casualty
Ave. NW, IR-6526, Washington, DC 20224.
Although  we  can’t  respond  individually  to  each  com-                                                                A casualty is the damage, destruction, or loss of property 
ment  received,  we  do  appreciate  your  feedback  and  will                                                            resulting from an identifiable event that is sudden, unex-
consider  your  comments  and  suggestions  as  we  revise                                                                pected, or unusual.
our  tax  forms,  instructions,  and  publications.                                                   Don’t  send         •   A sudden event is one that is swift, not gradual or pro-
tax questions, tax returns, or payments to the above ad-                                                                      gressive.
dress.
                                                                                                                          •   An unexpected event is one that is ordinarily unantici-
Getting answers to your tax questions.                                                                If you have             pated and unintended.
a tax question not answered by this publication or the                                                     How                An unusual event is one that isn’t a day-to-day occur-
                                                                                                                          •
To Get Tax Help section at the end of this publication, go                                                                    rence and that isn’t typical of the activity in which you 
to  the  IRS  Interactive  Tax  Assistant  page  at                                                   IRS.gov/                were engaged.
Help/ITA  where  you  can  find  topics  by  using  the  search 
feature or viewing the categories listed.                                                                                  Casualty losses are deductible during the tax year that 
                                                                                                                          the loss is sustained. This is generally the tax year that the 
Getting  tax  forms,  instructions,  and  publications.                                                                   loss occurred. However, a casualty loss may be sustained 
Go to IRS.gov/Forms to download current and prior-year                                                                    in a year after the casualty occurred. See When To Report 
forms, instructions, and publications.                                                                                    Gains and Losses and Table 3, later.
Ordering tax forms, instructions, and publications. 
Go to IRS.gov/OrderForms to order current forms, instruc-                                                                 Definitions. Three  specific  types  of  casualty  losses  are 
tions,  and  publications;  call  800-829-3676  to  order                                                                 described in this publication.
prior-year  forms  and  instructions.  The  IRS  will  process                                                            1.  Federal casualty losses.
your order for forms and publications as soon as possible. 
Don’t resubmit requests you’ve already sent us. You can                                                                   2.  Disaster losses.
get forms and publications faster online.                                                                                 3.  Qualified disaster losses.
                                                                                                                           All three types of losses refer to federally declared dis-
Useful Items
                                                                                                                          asters, but the requirements for each loss vary. A federally 
You may want to see:
                                                                                                                          declared  disaster  is  a  disaster  determined  by  the  Presi-
                                                                                                                          dent of the United States to warrant assistance by the fed-
Publication
                                                                                                                          eral  government  under  the  Stafford  Act.  A  federally  de-
  523   523 Selling Your Home                                                                                             clared disaster includes (a) a major disaster declaration, 
                                                                                                                          or (b) an emergency declaration under the Stafford Act.
  525   525 Taxable and Nontaxable Income
                                                                                                                           Federal  casualty  loss.   A  federal  casualty  loss  is  an 
  536   536 Net Operating Losses (NOLs) for Individuals,                                                                  individual’s casualty or theft loss of personal-use property 
        Estates, and Trusts                                                                                               that  is  attributable  to  a  federally  declared  disaster.  The 
  544   544 Sales and Other Dispositions of Assets                                                                        casualty loss must occur in a state receiving a federal dis-
                                                                                                                          aster  declaration.  If  you  suffered  a  federal  casualty  loss, 
  550   550 Investment Income and Expenses                                                                                you are eligible to claim a casualty loss deduction. If you 
  551   551 Basis of Assets                                                                                               suffered a casualty or theft loss of personal-use property 
                                                                                                                          that wasn’t attributable to a federally declared disaster, it 
  584   584 Casualty, Disaster, and Theft Loss Workbook                                                                   isn’t  a  federal  casualty  loss,  and  you  may  not  claim  a 
        (Personal-Use Property)                                                                                           casualty loss deduction unless the exception applies. See 
                                                                                                                          the Caution under Deductible losses, later.
  584-B          584-B Business Casualty, Disaster, and Theft Loss 
        Workbook                                                                                                           Disaster loss.    A disaster loss is a loss that is attributa-
                                                                                                                          ble to a federally declared disaster and that occurs in an 
Form (and Instructions)                                                                                                   area  eligible  for  assistance  pursuant  to  the  Presidential 
  Schedule A (Form 1040)      Schedule A (Form 1040) Itemized Deductions                                                  declaration. The disaster loss must occur in a county eligi-
                                                                                                                          ble  for  public  or  individual  assistance  (or  both).  Disaster 
  Schedule A (Form 1040-NR)                                                 Schedule A (Form 1040-NR) Itemized Deductions losses  aren’t  limited  to  individual  personal-use  property 
        (for nonresident aliens)                                                                                          and  may  be  claimed  for  individual  business  or  in-
                                                                                                                          come-producing property and by corporations, S corpora-
  Schedule D (Form 1040)                             Schedule D (Form 1040) Capital Gains and Losses
                                                                                                                          tions, and partnerships. If you suffered a disaster loss, you 
  4684      4684 Casualties and Thefts                                                                                    are eligible to claim a casualty loss deduction and to elect 
                                                                                                                          to claim the loss in the preceding tax year. See Disaster 
  4797      4797 Sales of Business Property
                                                                                                                          Area Losses, later.
See How To Get Tax Help near the end of this publication 
for information about getting publications and forms.

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Qualified disaster loss. A qualified disaster loss also $3,000 and determined it didn’t owe you the remaining
includes an individual's casualty and theft loss of per- $2,000 from your claim. The $2,000 personal casualty
sonal-use property that is attributable to: loss is sustained in 2023 even though the storm occurred
in 2021. Thus, the $2,000 isn’t a federal casualty loss and
• A major disaster declared by the President under sec-
isn’t deductible as a casualty loss under the new limita-
tion 401 of the Stafford Act in 2016;
tions.
• Hurricane Harvey;
An exception to the rule limiting the deduction for
• Tropical Storm Harvey; ! personal casualty and theft losses to federal
• Hurricane Irma; CAUTION casualty losses applies where you have personal
casualty gains. In this case, you may deduct personal
• Hurricane Maria; casualty losses that aren’t attributable to a federally de-
• The California wildfires in 2017 and January 2018; clared disaster to the extent they don’t exceed your per-
sonal casualty gains.
• A major disaster that was declared by the President
under section 401 of the Stafford Act and that occur- Casualty losses can result from a number of different
red in 2018 and before December 21, 2019, and con- causes, including the following.
tinued no later than January 19, 2020 (except those • Car accidents (but see Nondeductible losses next for
attributable to the California wildfires in January 2018 exceptions).
that received prior relief); and
• Earthquakes.
• A major disaster that was declared by the President
during the period between January 1, 2020, and Feb- • Fires (but see Nondeductible losses next for excep-
ruary 25, 2021. Also, this disaster must have an inci- tions).
dent period that began on or after December 28, • Floods.
2019, and on or before December 27, 2020, and must
have ended no later than January 26, 2021. The defi- • Government-ordered demolition or relocation of a
home that is unsafe to use because of a disaster as
nition of a qualified disaster loss does not extend to
discussed under Disaster Area Losses, later.
any major disaster that has been declared only by rea-
son of COVID-19 (because the incident period for • Mine cave-ins.
COVID-19 extended beyond January 26, 2021). Thus,
• Shipwrecks.
given that the incident period for COVID-19 generally
ran from January 20, 2020, to May 11, 2023, a loss • Sonic booms.
due to COVID-19 is not a qualified disaster loss. • Storms, including hurricanes and tornadoes.
If you suffered a qualified disaster loss, you are eligible Terrorist attacks.
•
to claim a casualty loss deduction, to elect to claim the
loss in the preceding tax year, and to deduct the loss with- • Vandalism.
out itemizing other deductions on Schedule A (Form • Volcanic eruptions.
1040).
See IRS.gov/DisasterTaxRelief for date-specific decla- Nondeductible losses. A casualty loss isn’t deductible,
rations associated with these disasters and for more infor- even to the extent the loss doesn’t exceed your personal
mation. casualty gains, if the damage or destruction is caused by
the following.
Deductible losses. For tax years 2018 through 2025, if
you are an individual, casualty losses of personal-use • Accidentally breaking articles such as glassware or
property are deductible only if the loss is attributable to a china under normal conditions.
federally declared disaster (federal casualty loss). Per- • A family pet (explained below).
sonal-use property is other than business property or in-
come-producing property. If the event causing you to suf- • A fire if you willfully set it, or pay someone else to set
it.
fer a personal casualty loss (not attributed to a federally
declared disaster) occurred before January 1, 2018, but • A car accident if your willful negligence or willful act
the casualty loss wasn’t sustained until January 1, 2018, caused it. The same is true if the willful act or willful
or later, the casualty loss isn’t deductible. See When To negligence of someone acting for you caused the ac-
Report Gains and Losses, later, for more information on cident.
when a casualty loss is sustained.
• Progressive deterioration (explained below). However,
Example. As a result of a storm, a tree fell on your see Special Procedure for Damage From Corrosive
house in December 2021, and you suffered $5,000 in Drywall, later.
damage. The President didn’t declare the storm a feder- Family pet. Loss of property due to damage by a fam-
ally declared disaster. You filed a claim with your insur- ily pet isn’t deductible as a casualty loss unless the re-
ance company and reasonably expected the entire quirements discussed earlier under Casualty are met.
amount of the claim to be covered by your insurance com-
pany. In January 2023, your insurance company paid you

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Example. Your antique oriental rug was damaged by as problem drywall under the two-step identification
your new puppy before it was housebroken. Because the method published by the Consumer Product Safety Com-
damage wasn’t unexpected and unusual, the loss isn’t de- mission (CPSC) and the Department of Housing and Ur-
ductible as a casualty loss. ban Development (HUD) in their interim guidance dated
January 28, 2010, as revised by the CPSC and HUD. The
Progressive deterioration. Loss of property due to
revised identification guidance and remediation guidelines
progressive deterioration isn’t deductible as a casualty
are available at CPSC.gov/en/Safety-Education/Safety-
loss. This is because the damage results from a steadily
Education-Centers/Drywall-Information-Center.
operating cause or a normal process, rather than from a
sudden event. The following are examples of damage due Special instructions for completing Form 4684. If you
to progressive deterioration. choose to follow this special procedure, complete Form
• The steady weakening of a building due to normal 4684, Section A, according to the instructions below. The
wind and weather conditions. IRS won’t challenge your treatment of damage resulting
from corrosive drywall as a casualty loss if you determine
• The deterioration and damage to a water heater that and report the loss as explained below.
bursts. However, the rust and water damage to rugs
and drapes caused by the bursting of a water heater Top margin of Form 4684. Enter “Revenue Proce-
does qualify as a casualty. dure 2010-36.”
• Most losses of property caused by droughts. To be de- Line 1. Enter the information required by the line 1 in-
ductible, a drought-related loss must generally be in- structions.
curred in a trade or business or in a transaction en-
Line 2. Skip this line.
tered into for profit.
• Termite or moth damage. Line 3. Enter the amount of insurance or other reim-
bursements you received (including through litigation). If
• The damage or destruction of trees, shrubs, or other none, enter -0-.
plants by a fungus, disease, insects, worms, or similar
pests. However, a sudden destruction due to an unex- Lines 4–7. Skip these lines.
pected or unusual infestation of beetles or other in- Line 8. Enter the amount you paid to repair the dam-
sects may result in a casualty loss. age to your home and household appliances due to corro-
sive drywall. Enter only the amounts you paid to restore
Special Procedure for Damage From your home to the condition existing immediately before the
Corrosive Drywall damage. Don’t enter any amounts you paid for improve-
ments or additions that increased the value of your home
Because the personal casualty losses claimed above its pre-loss value. If you replaced a household ap-
! under this special procedure aren’t attributable to pliance instead of repairing it, enter the lesser of:
CAUTION a federally declared disaster, they’re only deducti-
ble to the extent such losses don’t exceed your personal • The current cost to replace the original appliance, or
casualty gains. • The basis of the original appliance (generally its cost).
Line 9. If line 8 is more than line 3, do one of the fol-
If you suffered property losses due to the effects of cer- lowing.
tain imported drywall installed in homes between 2001
and 2009, under a special procedure, you can deduct the 1. If you have a pending claim for reimbursement (or you
amounts you paid to repair damage to your home and intend to pursue reimbursement), enter 75% of the
household appliances due to corrosive drywall. Under this difference between lines 3 and 8.
procedure, you treat the amounts paid for repairs as a 2. If item (1) doesn’t apply to you, enter the full amount
casualty loss in the year of payment. For example, of the difference between lines 3 and 8.
amounts you paid for repairs in 2023 are deductible on
your 2023 tax return and amounts you paid for repairs in If line 8 is less than or equal to line 3, you can’t claim a
2022 are deductible on your 2022 tax return. casualty loss deduction using this special procedure.
If you have a pending claim for reimbursement (or
Note. If you paid for any repairs before 2023 and you
you intend to pursue reimbursement), you may
choose to follow this special procedure, you can amend CAUTION!
have income or an additional deduction in a later
your return for the earlier year by filing Form 1040-X,
tax year depending on the actual amount of reimburse-
Amended U.S. Individual Income Tax Return, and attach-
ment received. See Reimbursement Received After De-
ing a completed Form 4684 for the appropriate year. Form
ducting Loss, later.
4684 for the appropriate year can be found at IRS.gov.
Generally, Form 1040-X must be filed within 3 years after
Lines 10–18. Complete these lines according to the
the date the original return was filed or within 2 years after
Instructions for Form 4684.
the date the tax was paid, whichever is later.
Choosing not to follow this special procedure. If you
Corrosive drywall. For purposes of this special proce-
choose not to follow this special procedure, you are
dure, “corrosive drywall” means drywall that is identified

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subject to all of the provisions that apply to the deductibil- disaster, resulting in a casualty loss of $25,000. Because
ity of casualty losses, and you must complete lines 1–9 Martin and Grace experienced a $13,000 personal casu-
according to the Instructions for Form 4684. This means, alty gain as a result of the replacement-value insurance,
for example, that you must establish that the damage, de- they can offset that gain with a portion of their loss attribut-
struction, or loss of property resulted from an identifiable able to the stolen necklace and claim the full federal casu-
event as defined earlier under Casualty. Furthermore, you alty loss of $25,000 subject to the $100 and 10% of AGI
must have proof that shows the following. reductions.

• The loss is properly deductible in the tax year you Decline in market value of stock. You can’t deduct as a
claimed it and not in some other year. See When To theft loss the decline in market value of stock acquired on
Report Gains and Losses, later. the open market for investment if the decline is caused by
• The amount of the claimed loss. See Proof of Loss, disclosure of accounting fraud or other illegal misconduct
later. by the officers or directors of the corporation that issued
• No claim for reimbursement of any portion of the loss the stock. However, you may be able to deduct it as a cap-
exists for which there is a reasonable prospect of re- ital loss on Schedule D (Form 1040) if the stock is sold or
covery. See When To Report Gains and Losses, later. exchanged or becomes completely worthless. For more
information about stock sales, worthless stock, and capital
losses, see chapter 4 of Pub. 550.

Theft Mislaid or lost property. The simple disappearance of
money or property isn’t a theft. However, an accidental
A theft is the taking and removing of money or property loss or disappearance of property can qualify as a casu-
with the intent to deprive the owner of it. The taking of alty if it results from an identifiable event that is sudden,
property must be illegal under the law of the state where it unexpected, or unusual. Sudden, unexpected, and un-
occurred and it must have been done with criminal intent. usual events were defined earlier under Casualty.
You don’t need to show a conviction for theft.
Example. A car door is accidentally slammed on your
Theft includes the taking of money or property by the hand, breaking the setting of your diamond ring. The dia-
following means. mond falls from the ring and is never found. The loss of
• Blackmail. the diamond is a casualty.

• Burglary. Losses from Ponzi-type investment schemes. The
• Embezzlement. IRS has issued the following guidance to assist taxpayers
who are victims of losses from Ponzi-type investment
• Extortion.
schemes.
• Kidnapping for ransom.
• Revenue Ruling 2009-9, 2009-14 I.R.B. 735 (available
• Larceny. at IRS.gov/irb/2009-14_IRB#RR-2009-9).
• Robbery. • Revenue Procedure 2009-20, 2009-14 I.R.B. 749
The taking of money or property through fraud or misrep- (available at IRS.gov/irb/2009-14_IRB#RP-2009-20).
resentation is theft if it is illegal under state or local law. • Revenue Procedure 2011-58, 2011-50 I.R.B. 849
(available at IRS.gov/irb/2011-50_IRB#RP-2011-58).
Theft loss deduction limited. For tax years 2018
through 2025, if you are an individual, casualty and theft If you qualify to use Revenue Procedure 2009-20, as
losses of personal-use property are deductible only if the modified by Revenue Procedure 2011-58, and you choose
losses are attributable to a federally declared disaster to follow the procedures in the guidance, first fill out Sec-
(federal casualty loss). tion C of Form 4684 to determine the amount to enter on
Section B, line 28. Skip lines 19 through 27, but you must
An exception to the rule limiting the deduction for
fill out Section B, lines 29 through 39, as appropriate. Sec-
! personal casualty and theft losses to federal tion C of Form 4684 replaces Appendix A in Revenue Pro-
CAUTION casualty losses applies where you have personal
cedure 2009-20. You don’t need to complete Appendix A.
casualty gains. In this case, you may deduct personal
For more information, see the above revenue ruling and
casualty losses that aren’t attributable to a federally de-
revenue procedures, and the Instructions for Form 4684.
clared disaster to the extent they don’t exceed your per-
If you choose not to use the procedures in Revenue
sonal casualty gains.
Procedure 2009-20, as modified by Revenue Procedure
2011-58, you may claim your theft loss by filling out Sec-
Example. Martin and Grace experienced multiple per- tion B, lines 19 through 39, as appropriate.
sonal casualties in 2023. Grace’s diamond necklace was Note that the personal-use property limitation for tax
stolen, resulting in a $15,500 casualty loss. Martin and years 2018 through 2025 does not apply to losses on in-
Grace also lost their camper as a result of a lightning come-producing property, such as losses from Ponzi-type
strike. They have replacement-value insurance on the investment schemes.
camper, so they have a $13,000 gain. Finally, they lost
their car in a flood determined to be a federally declared

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More information. For more information, see Deposit in
Insolvent or Bankrupt Financial Institution in Pub. 550.
Loss on Deposits
Deducted loss recovered. If you recover an amount you
A loss on deposits can occur when a bank, credit union, or deducted as a loss in an earlier year, you may have to in-
other financial institution becomes insolvent or bankrupt. If clude the amount recovered in your income for the year of
you incurred this type of loss, you can choose one of the recovery. If any part of the original deduction didn’t reduce
following ways to deduct the loss. your tax in the earlier year, you don’t have to include that
• As a casualty loss (to the extent the loss doesn’t ex- part of the recovery in your income. For more information,
ceed your personal casualty gains). see Recoveries in Pub. 525.
• As a nonbusiness bad debt.

You can no longer claim any miscellaneous item- Proof of Loss
! ized deductions, including the deduction for an or-
CAUTION dinary loss on deposits in insolvent or bankrupt fi-
To deduct a casualty or theft loss, you must be able to
nancial institutions. show that there was a casualty or theft. You must also be
able to support the amount you take as a deduction.
Casualty loss. You can choose to deduct a loss on de-
posits as a casualty loss for any year in which you can rea- Casualty loss proof. For a casualty loss, you should be
sonably estimate how much of your deposits you have lost able to show all of the following.
in an insolvent or bankrupt financial institution. The choice • That you were the owner of the property, or if you
is generally made on the return you file for that year and leased the property from someone else, that you were
applies to all your losses on deposits for the year in that contractually liable to the owner for the damage.
particular financial institution. If you treat the loss as a
casualty loss, you can’t treat the same amount of the loss • The type of casualty (car accident, fire, storm, etc.)
as a nonbusiness bad debt when it actually becomes and when it occurred.
worthless. However, you can take a nonbusiness bad debt • That the loss was a direct result of the casualty.
deduction for any amount of loss that is more than the es-
• Whether a claim for reimbursement exists for which
timated amount you deducted as a casualty or ordinary
there is a reasonable expectation of recovery.
loss. Once you make the choice, you can’t change it with-
out permission from the IRS. Theft loss proof. For a theft loss, you should be able to
Casualty loss limitation. If you are an individual, show all of the following.
casualty losses of personal-use property are deductible • That you were the owner of the property.
only if the loss is attributable to a federally declared disas-
ter. An exception to the rule limiting the deduction for per- • That your property was stolen.
sonal casualty and theft losses to federal casualty losses • When you discovered your property was missing.
applies where you have personal casualty gains. Because Whether a claim for reimbursement exists for which
•
a loss on deposits isn’t attributable to a federally declared there is a reasonable expectation of recovery.
disaster, you may deduct losses on deposits as personal
casualty losses only to the extent they don’t exceed your It is important that you have records that will prove
personal casualty gains. your deduction. If you don’t have the actual re-
RECORDS cords to support your deduction, you can use
Nonbusiness bad debt. If you don’t choose to claim the other satisfactory evidence to support it.
loss as a casualty loss for purposes of offsetting gains,
you must wait until the year the actual loss is determined
and deduct the loss as a nonbusiness bad debt in that
year. Figuring a Loss

How to report. The kind of deduction you choose for To determine your deduction for a casualty or theft loss,
your loss on deposits determines how you report your you must first figure your loss.
loss. See Table 1.
Amount of loss. Figure the amount of your loss using
Table 1. Reporting Loss on Deposits the following steps.
IF you choose to report the loss THEN report it on... 1. Determine your adjusted basis in the property before
as a... the casualty or theft.
casualty loss (see Casualty loss Form 4684 and Schedule A
limitation under Loss on Deposits) (Form 1040). 2. Determine the decrease in fair market value (FMV) of
the property as a result of the casualty or theft.
nonbusiness bad debt Form 8949 and Schedule D
(Form 1040). 3. From the smaller of the amounts you determined in
(1) and (2), subtract any insurance or other
reimbursement you received or expect to receive.

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For personal-use property, apply the deduction limits, dis- See Real property under Figuring the Deduction, later.
cussed later, to determine the amount of your deductible
loss. Decrease in FMV
Gain from reimbursement. If your reimbursement is
more than your adjusted basis in the property, you have a FMV is the price for which you could sell your property to a
gain. This is true even if the decrease in the FMV of the willing buyer when neither of you has to sell or buy and
property is smaller than your adjusted basis. If you have a both of you know all the relevant facts.
gain, you may have to pay tax on it, or you may be able to
postpone reporting the gain. See Figuring a Gain, later. The decrease in FMV used to figure the amount of a
casualty or theft loss is the difference between the proper-
Business or income-producing property. If you ty’s FMV immediately before and immediately after the
have business or income-producing property, such as casualty or theft.
rental property, and it is stolen or completely destroyed,
the decrease in FMV isn’t considered. Your loss is figured FMV of stolen property. The FMV of property immedi-
as follows: ately after a theft is considered to be zero because you no
longer have the property.
Your adjusted basis in the property
Example. Several years ago, you purchased silver dol-
MINUS
lars at face value for $150. This is your adjusted basis in
Any salvage value the property. Your silver dollars were stolen this year. The
MINUS FMV of the coins was $1,000 just before they were stolen,
Any insurance or other reimbursement you receive or expect to and insurance didn’t cover them. Your theft loss is $150.
receive
Recovered stolen property. Recovered stolen property
Loss of inventory. There are two ways you can de- is your property that was stolen and later returned to you.
duct a casualty or theft loss of inventory, including items If you recovered property after you had already taken a
you hold for sale to customers. theft loss deduction, you must refigure your loss using the
One way is to deduct the loss through the increase in smaller of the property’s adjusted basis (explained later)
the cost of goods sold by properly reporting your opening or the decrease in FMV from the time just before it was
and closing inventories. Don’t claim this loss again as a stolen until the time it was recovered. Use this amount to
casualty or theft loss. If you take the loss through the in- refigure your total loss for the year in which the loss was
crease in the cost of goods sold, include any insurance or deducted.
other reimbursement you receive for the loss in gross in- If your refigured loss is less than the loss you deducted,
come. you generally have to report the difference as income in
The other way is to deduct the loss separately. If you the recovery year. But report the difference only up to the
deduct it separately, eliminate the affected inventory items amount of the loss that reduced your tax. For more infor-
from the cost of goods sold by making a downward adjust- mation on the amount to report, see Recoveries in Pub.
ment to opening inventory or purchases. Reduce the loss 525.
by the reimbursement you received. Don’t include the re-
imbursement in gross income. If you don’t receive the re- Figuring Decrease in FMV—Items To
imbursement by the end of the year, you may not claim a Consider
loss to the extent you have a reasonable prospect of re-
covery. To figure the decrease in FMV because of a casualty or
Leased property. If you are liable for casualty damage theft, you generally need a competent appraisal. However,
to property you lease, your loss is the amount you must other measures can also be used to establish certain de-
pay to repair the property minus any insurance or other re- creases. See Appraisal Cost of cleaning up or making re-,
imbursement you receive or expect to receive. pairs, and Special Procedure—Safe Harbor Methods for
Determining Casualty and Theft Losses below.
Separate computations. Generally, if a single casualty
or theft involves more than one item of property, you must Appraisal. An appraisal to determine the difference be-
figure the loss on each item separately. Then combine the tween the FMV of the property immediately before a casu-
losses to determine the total loss from that casualty or alty or theft and immediately afterward should be made by
theft. a competent appraiser. The appraiser must recognize the
effects of any general market decline that may occur along
Exception for personal-use real property. In figur- with the casualty. This information is needed to limit any
ing a casualty loss on personal-use real property, the en- deduction to the actual loss resulting from damage to the
tire property (including any improvements, such as build- property.
ings, trees, and shrubs) is treated as one item. Figure the Several factors are important in evaluating the accuracy
loss using the smaller of the following. of an appraisal, including the following.
• The decrease in FMV of the entire property. The appraiser’s familiarity with your property before
•
• The adjusted basis of the entire property. and after the casualty or theft.

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• The appraiser’s knowledge of sales of comparable safe harbor methods in Revenue Procedure 2018-08,
property in the area. 2018-2 I.R.B. 286, allow you to determine the decrease in
FMV in other ways.
• The appraiser’s knowledge of conditions in the area of
the casualty. If you are an individual, casualty losses of per-
sonal-use property are deductible only if the loss
• The appraiser’s method of appraisal. CAUTION!
is attributable to a federally declared disaster. An
You may be able to use an appraisal that you exception to the rule limiting the deduction for personal
TIP used to get a federal loan (or a federal loan guar- casualty and theft losses applies if you have personal
antee) as the result of a federally declared disas- casualty gains. In this case, you may deduct personal
ter to establish the amount of your disaster loss. For more casualty losses that aren’t attributable to a federally de-
information on disasters, see Disaster Area Losses, later. clared disaster to the extent they don’t exceed your per-
sonal casualty gains.
Cost of cleaning up or making repairs. The cost of re-
pairing damaged property isn’t part of a casualty loss. Nei- Special procedure for determining casualty and theft
ther is the cost of cleaning up after a casualty. But you can losses generally. Revenue Procedure 2018-08, 2018-2
use the cost of cleaning up or of making repairs after a I.R.B. 286, available at IRS.gov/irb/
casualty as a measure of the decrease in FMV if you meet 2018-02_IRB#RP-2018-08, provides safe harbor methods
all the following conditions. that you may use to figure the amount of your casualty and
• The repairs are actually made. theft losses of your personal-use residential real property
and personal belongings. If you qualify for and use a safe
• The repairs are necessary to bring the property back harbor method described in Revenue Procedure 2018-08,
to its condition before the casualty. the IRS won’t challenge your determination. The use of a
• The amount spent for repairs isn’t excessive. safe harbor method described in Revenue Procedure
2018-08 isn’t mandatory.
• The repairs take care of the damage only.
• The value of the property after the repairs isn’t, due to Personal-use residential real property safe harbor
the repairs, more than the value of the property before methods. Personal-use residential real property is gener-
the casualty. ally real property, including improvements, that is owned
by the individual who suffered a casualty loss and that
Landscaping. The cost of restoring landscaping to its contains at least one personal residence. It doesn’t in-
original condition after a casualty may indicate the de- clude a personal residence if any part of the personal resi-
crease in FMV. You may be able to measure your loss by dence is used as rental property or contains a home office
what you spend on the following. used in a trade or business or transaction entered into for
• Removing destroyed or damaged trees and shrubs, profit. For more details, see Revenue Procedure 2018-08.
minus any salvage you receive. The safe harbor methods for personal-use residential
real property available through Revenue Procedure
• Pruning and other measures taken to preserve dam- 2018-08 are the following.
aged trees and shrubs.
• Estimated repair cost method.
• Replanting necessary to restore the property to its ap-
proximate value before the casualty. • De minimis method.
• Insurance method.
Car value. Books issued by various automobile organiza-
tions that list the manufacturer and the model of your car • Federally declared disaster method—contractor safe
may be useful in figuring the value of your car. You can use harbor.
the retail value for your car listed in the book and modify it • Federally declared disaster method—disaster loan ap-
by such factors as mileage and the condition of your car to praisal.
determine its value. The prices aren’t official, but they may
be useful in determining value and suggesting relative pri- Estimated repair cost method. The estimated repair
ces for comparison with current sales and offerings in your cost safe harbor method allows you to figure the decrease
area. If your car isn’t listed in the books, determine its in the FMV of your personal-use residential real property
value from other sources. A dealer’s offer for your car as a using the lesser of two repair estimates prepared by sepa-
trade-in on a new car isn’t usually a measure of its true rate and independent licensed contractors. The estimates
value. must detail the itemized costs to restore your property to
its condition immediately before the casualty. The estima-
ted repair cost safe harbor method is limited to casualty
Special Procedure—Safe Harbor Methods
losses of $20,000 or less.
for Determining Casualty and Theft Losses
De minimis method. The de minimis safe harbor
To figure the amount of your casualty and theft losses, you method allows you to figure the decrease in the FMV of
must generally determine the actual reduction in the FMV your personal-use residential real property based on a
of lost or damaged property using a competent appraisal written good-faith estimate of the cost of repairs required
or the cost of repairs you actually make. But the special to restore your property to its condition immediately before

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the casualty. You must keep documentation showing how belonging. See the Personal Belongings Valuation Table in
you estimated the amount of your loss. The de minimis Revenue Procedure 2018-08. If you choose to use the re-
safe harbor method is available for casualty losses of placement cost safe harbor method, then you must use
$5,000 or less. that method for all your personal belongings, with certain
exceptions identified in Revenue Procedure 2018-08.
Insurance method. The insurance safe harbor
Each of these safe harbor methods is subject to addi-
method allows you to figure the decrease in the FMV of
tional rules and exceptions. For additional information, see
your personal-use residential real property based upon
Revenue Procedure 2018-08.
the estimated loss in reports prepared by your homeown-
ers or flood insurance company. These reports must set Decreases to safe harbor loss amount. The loss de-
forth the estimated loss you sustained from the damage to termined through the safe harbor methods must be re-
or the destruction of your property. duced by the value of any repairs provided by a third party
Federally declared disaster method—contractor at no cost (for example, work done by volunteers or via
safe harbor. If the loss occurred in a disaster area and donations) to you. Additionally, reduce your loss by the
was due to a federally declared disaster, then you may amount of any insurance, reimbursements, or other com-
use the contractor safe harbor method or the disaster loan pensation received.
appraisal method. Under the contractor safe harbor
Reporting requirements on Form 4684. Attach a state-
method, you may use the contract price for the repairs
ment to Form 4684 stating that you used Revenue Proce-
specified in a contract prepared by an independent and li-
dure 2018-08 to determine the amount of your casualty
censed contractor to determine the decrease in the FMV
loss. Include the specific safe harbor method used. When
of your personal-use residential real property. This safe
completing Form 4684, don’t enter an amount on line 5 or
harbor method doesn’t apply unless you are subject to a
line 6 for each property. Instead, enter the decrease in the
binding contract signed by you and the contractor setting
FMV determined under the relevant safe harbor method
forth the itemized costs to restore your personal-use resi-
on line 7.
dential real property to its condition immediately before
the casualty. For losses due to Hurricane Harvey, Hurricane
TIP Irma, and Hurricane Maria, see Revenue Proce-
Federally declared disaster method—disaster loan
dure 2018-09, 2018-2 I.R.B. 290, available at
appraisal. Under the disaster loan appraisal safe harbor
IRS.gov/irb/2018-02_IRB#RP-2018-09, for the cost in-
method, you may use an appraisal prepared to obtain a
dexes safe harbor method.
loan of federal funds or a loan guarantee from the federal
government that identifies your estimated loss from a fed-
erally declared disaster to determine the decrease in the Figuring Decrease in FMV—Items Not To
FMV of your personal-use residential real property. Consider

Personal belongings safe harbor methods. Personal You generally shouldn’t consider the following items when
belongings generally include items of tangible personal attempting to establish the decrease in FMV of your prop-
property owned by an individual who suffered a casualty erty.
or theft loss if they aren’t used in a trade or business. Per-
sonal belongings don’t include an item that maintains or Cost of protection. The cost of protecting your property
increases its value over time or certain other types of against a casualty or theft isn’t part of a casualty or theft
property. For more details, see Revenue Procedure loss. The amount you spend on insurance or to board up
2018-08. The safe harbor methods for personal belong- your house against a storm isn’t part of your loss. If the
ings are the de minimis method and the replacement cost property is business property, these expenses are deduc-
safe harbor method for federally declared disasters. tible as business expenses.
If you make permanent improvements to your property
De minimis method. Under the de minimis method,
to protect it against a casualty or theft, add the cost of
you can make a good-faith estimate of the decrease in the
these improvements to your basis in the property. An ex-
FMV of your personal belongings. You must maintain re-
ample would be the cost of a dike to prevent flooding.
cords describing your affected personal belongings as
well as your methodology for estimating your loss. This Exception. You can’t increase your basis in the prop-
method is limited to losses of $5,000 or less. erty by, or deduct as a business expense, any expendi-
tures you made with respect to qualified disaster mitiga-
Replacement cost safe harbor method for federally
tion payments (discussed later under Disaster Area
declared disasters. The replacement cost safe harbor
Losses).
method for federally declared disasters allows you to de-
termine the FMV of your personal belongings located in a Related expenses. The incidental expenses due to a
disaster area immediately before a federally declared dis- casualty or theft, such as expenses for the treatment of
aster to figure the amount of your casualty or theft loss. To personal injuries, for temporary housing, or for a rental car,
use the replacement cost safe harbor method, you must aren’t part of your casualty or theft loss. However, they
first determine the current cost to replace your personal may be deductible as business expenses if the damaged
belonging with a new one and then reduce that amount by or stolen property is business property.
10% for each year you have owned the personal

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Replacement cost. The cost of replacing stolen or de- available at IRS.gov/irb/2011-35_IRB#NOT-2011-66. For
stroyed property isn’t part of a casualty or theft loss. optional safe harbor guidance under section 1022, see
Revenue Procedure 2011-41, 2011-35 I.R.B. 188, availa-
Example. You bought a new chair 4 years ago for ble at IRS.gov/irb/2011-35_IRB#RP-2011-41.
$300. In April, a flood destroyed the chair. You estimate
that it would cost $500 to replace it. If you had sold the Adjustments to basis. While you own the property, vari-
chair before the flood, you estimate that you could have ous events may take place that change your basis. Some
received only $100 for it because it was 4 years old. The events, such as additions or permanent improvements to
chair wasn’t insured. Your loss is $100, the FMV of the the property, increase basis. Others, such as earlier casu-
chair before the flood. It isn’t $500, the replacement cost. alty losses and depreciation deductions, decrease basis.
When you add the increases to the basis and subtract the
Sentimental value. Don’t consider sentimental value decreases from the basis, the result is your adjusted ba-
when determining your loss. If a family portrait, heirloom, sis. See Pub. 551 for more information on figuring the ba-
or keepsake is damaged, destroyed, or stolen, you must sis of your property.
base your loss on its FMV, as limited by your adjusted ba-
sis in the property.
Insurance and Other
Decline in market value of property in or near casu- Reimbursements
alty area. A decrease in the value of your property be-
cause it is in or near an area that suffered a casualty, or If you receive an insurance or other type of reimburse-
that might again suffer a casualty, isn’t to be taken into ment, you must subtract the reimbursement when you fig-
consideration. You have a loss only for actual casualty ure your loss. You don’t have a casualty or theft loss to the
damage to your property. However, if your home is in a extent you are reimbursed.
federally declared disaster area, see Disaster Area Los- If in the year of the casualty there is a claim for reim-
ses, later. bursement with a reasonable prospect of recovery, the
Costs of photographs and appraisals. Photographs loss isn’t sustained until you know with reasonable cer-
taken after a casualty will be helpful in establishing the tainty whether such reimbursement will be received. If you
condition and value of the property after it was damaged. expect to be reimbursed for part or all of your loss, you
Photographs showing the condition of the property after it must subtract the expected reimbursement when you fig-
was repaired, restored, or replaced may also be helpful. ure your loss. You must reduce your loss even if you don’t
Appraisals are used to figure the decrease in FMV be- receive payment until a later tax year. See Reimbursement
cause of a casualty or theft. See Appraisal, earlier, under Received After Deducting Loss, later.

Figuring Decrease in FMV—Items To Consider for infor- Failure to file a claim for reimbursement. If your prop-
mation about appraisals. erty is covered by insurance, you should file a timely insur-
The costs of photographs and appraisals used as evi- ance claim for reimbursement of your loss. If you don’t file
dence of the value and condition of property damaged as an insurance claim, you can’t deduct the full unrecovered
a result of a casualty aren’t a part of the loss. They are ex- amount as a casualty or theft loss and only the part of the
penses in determining your tax liability. For tax years 2018 loss that isn’t covered by your insurance policy is deducti-
through 2025, they can no longer be deducted as miscel- ble.
laneous itemized deductions.
The portion of the loss usually not covered by insur-
ance (for example, a deductible) isn’t subject to this rule.
Adjusted Basis
Example. Your car insurance policy includes compre-
The measure of your investment in the property you own is hensive coverage with a $1,000 deductible. Because your
its basis. For property you buy, your basis is usually its insurance doesn’t cover the first $1,000 of damages re-
cost to you. For property you acquire in some other way, sulting from a storm, the $1,000 is deductible (subject to
such as inheriting it, receiving it as a gift, or getting it in a the $100 and 10% rules, discussed later). This is true,
nontaxable exchange, you must figure your basis in an- even if you don’t file an insurance claim, because your in-
other way, as explained in Pub. 551. surance policy won’t reimburse you for the deductible.
Inherited property and the section 1022 election. If
you inherited property from someone who died in 2010 Types of Reimbursements
and the executor of the decedent’s estate made a section
The most common type of reimbursement is an insurance
1022 election using Form 8939, Allocation of Increase in
payment for your stolen or damaged property. Other types
Basis for Property Acquired From a Decedent, special
of reimbursements are discussed next. Also see the In-
rules regarding the basis would apply.
structions for Form 4684.
An executor of an estate of a decedent who died in
2010 could elect to apply a modified carryover basis treat- Employer’s emergency disaster fund. If you receive
ment to property acquired from the decedent. money from your employer’s emergency disaster fund and
For more detailed information about the Section 1022 you must use that money to rehabilitate or replace prop-
Election, see Notice 2011-66, 2011-35 I.R.B. 184, erty on which you are claiming a casualty loss deduction,

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you must take that money into consideration in computing • Food.
the casualty loss deduction. Take into consideration only
• Utilities.
the amount you used to replace your destroyed or dam-
aged property. • Miscellaneous services.
Normal living expenses consist of these same expenses
Example. Your home was extensively damaged by a
that you would have incurred but didn’t because of the
tornado. Your loss after reimbursement from your insur-
casualty or the threat of one.
ance company was $10,000. Your employer set up a dis-
aster relief fund for its employees. Employees receiving Example. As a result of a hurricane, you vacated your
money from the fund had to use it to rehabilitate or replace apartment for a month and moved to a motel. You nor-
their damaged or destroyed property. You received $4,000 mally pay $525 a month for rent. None was charged for
from the fund and spent the entire amount on repairs to the month the apartment was vacated. Your motel rent for
your home. In figuring your casualty loss, you must reduce this month was $1,200. You normally pay $200 a month for
your unreimbursed loss ($10,000) by the $4,000 you re- food. Your food expenses for the month you lived in the
ceived from your employer’s fund. Your casualty loss be- motel were $400. You received $1,100 from your insur-
fore applying the deduction limits (discussed later) is ance company to cover your living expenses. You deter-
$6,000. mine the payment you must include in income as follows.

Cash gifts. If you receive excludable cash gifts as a dis- 1. Insurance payment for living expenses. . . . . . . . . . . . $1,100
aster victim and there are no limits on how you can use 2. Actual expenses during the month you are
the money, you don’t reduce your casualty loss by these unable to use your home because of the
excludable cash gifts. This applies even if you use the hurricane. . . . . . . . . . . . . . . . . . . . . . $1,600
money to pay for repairs to property damaged in the dis- 3. Normal living expenses. . . . . . . . . . . . . 725
aster. 4. Temporary increase in living expenses: Subtract line 3
from line 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 875
Example. Your home was damaged by a hurricane. 5. Amount of payment includible in income: Subtract line 4
Relatives and neighbors made cash gifts to you that were from line 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 225
excludable from your income. You used part of the cash
gifts to pay for repairs to your home. There were no limits Tax year of inclusion. You include the taxable part of
or restrictions on how you could use the cash gifts. It was the insurance payment in income for the year you regain
an excludable gift, so the money you received and used to the use of your main home or, if later, for the year you re-
pay for repairs to your home doesn’t reduce your casualty ceive the taxable part of the insurance payment.
loss on the damaged home.
Example. Your main home was destroyed by a tornado
Insurance payments for living expenses. You don’t re- in June 2021. You regained use of your home in Novem-
duce your casualty loss by insurance payments you re- ber 2022. The insurance payments you received in 2021
ceive to cover living expenses in either of the following sit- and 2022 were $1,500 more than the temporary increase
uations. in your living expenses during those years. You include
this amount in income on your 2022 Form 1040. If, in
• You lose the use of your main home because of a 2023, you receive further payments to cover the living ex-
casualty. penses you had in 2021 and 2022, you must include those
• Government authorities don’t allow you access to your payments in income on your 2023 Form 1040 or 1040-SR.
main home because of a casualty or threat of one.
Disaster relief. Food, medical supplies, and other forms
Inclusion in income. If these insurance payments are of assistance you receive don’t reduce your casualty loss,
more than the temporary increase in your living expenses, unless they are replacements for lost or destroyed prop-
you must include the excess in your income. Report this erty.
amount on Schedule 1 (Form 1040), line 8z. However, if
Qualified disaster relief payments you receive for
the casualty occurs in a federally declared disaster area,
TIP expenses you incurred as a result of a federally
none of the insurance payments are taxable. See Quali-
declared disaster aren’t taxable income to you.
fied disaster relief payments, later, under Disaster Area
For more information, see Qualified disaster relief pay-
Losses.
ments under Disaster Area Losses, later.
A temporary increase in your living expenses is the dif-
ference between the actual living expenses you and your Disaster unemployment assistance payments are un-
family incurred during the period you couldn’t use your employment benefits that are taxable.
home and your normal living expenses for that period. Ac- Generally, disaster relief grants received under the Staf-
tual living expenses are the reasonable and necessary ex- ford Act aren’t included in your income. See Federal dis-
penses incurred because of the loss of your main home. aster relief grants, later, under Disaster Area Losses.
Generally, these expenses include the amounts you pay
for the following. Loan proceeds. Don’t reduce your casualty loss by loan
proceeds you use to rehabilitate or replace property on
• Renting suitable housing. which you are claiming a casualty loss deduction. If you
• Transportation.

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Table 2. Deduction Limit Rules for Personal-Use Property
$100 Rule 10% Rule
General Application You must reduce each casualty or theft loss by You must reduce your total casualty or theft
$100 when figuring your deduction. Apply this loss attributable to a federally declared disaster
rule to personal-use property after you have by 10% of your AGI. Apply this rule to
figured the amount of your loss.* personal-use property after you reduce each
loss by $100 (the $100 rule).**
Single Event Apply this rule only once, even if many pieces Apply this rule only once, even if many pieces
of property are affected. of property are affected.
More Than One Event Apply to the loss from each event. Apply to the total of all your losses from all
federally declared disasters.
More Than One Person—
With Loss From the Same Event Apply separately to each person. Apply separately to each person.
(other than a married couple filing jointly)
Married Couple— Filing
With Loss From the Joint Apply as if you were one person. Apply as if you were one person.
Same Event Return
Filing
Separate Apply separately to each spouse. Apply separately to each spouse.
Return
More Than One Owner Apply separately to each owner of jointly Apply separately to each owner of jointly
(other than a married couple filing jointly) owned property. owned property.
* Qualified disaster losses must be reduced by $500 when figuring your deduction. See Disaster Area Losses, later, for more information.
** The 10% rule doesn’t apply to qualified disaster losses. See Disaster Area Losses, later, for more information.

have a federal loan that is canceled (forgiven), see Fed- In January 2023, the court awards you a judgment of
eral loan canceled, later, under Disaster Area Losses. $2,000. However, in July it becomes apparent that you will
be unable to collect any amount from the other driver. You
Reimbursement Received After Deducting can deduct the loss in 2023 (to the extent it doesn’t ex-
Loss ceed your 2023 personal casualty gains) that is figured by
applying the deduction limits (discussed later).
If you figured your casualty or theft loss using the amount
of your expected reimbursement, you may have to adjust Actual reimbursement more than expected. If you
your tax return for the tax year in which you get your actual later receive a larger reimbursement amount than you ex-
reimbursement. This section explains the adjustment you pected, after you have claimed a deduction for the loss,
may have to make. you may have to include the extra reimbursement amount
in your income for the year you receive it. However, if any
If you paid amounts to repair damage to a per- part of the original deduction didn’t reduce your tax for the
! sonal residence with a deteriorating concrete earlier year, don’t include that part of the reimbursement
CAUTION foundation and claimed a deduction on an original
amount in your income. You don’t refigure your tax for the
or amended federal income tax return and payments were year you claimed the deduction. See Recoveries in Pub.
made to you (or on your behalf to contractors) by the Con- 525 to find out how much extra reimbursement to include
necticut Foundation Solutions Indemnity Company in income.
(CFSIC), you must include some or part of the payments
in your gross income. See Announcement 2020-5, Example. In 2022, a hurricane that was a federally de-
2020-19 I.R.B. 796 (available at IRS.gov/irb/ clared disaster destroyed your motorboat. Your loss was
2020-19_IRB#ANN-2020-5). $3,000, and you estimated that your insurance would
cover $2,500 of it. You didn't itemize deductions on your
Actual reimbursement less than expected. If you later 2022 return nor did you increase your standard deduction
receive less reimbursement than you expected, include by the amount of your loss. When the insurance company
that difference as a loss with your other losses (if any) on reimburses you for the loss, you don’t report any of the re-
your return for the year in which you can reasonably ex- imbursement as income. This is true even if it is for the full
pect no more reimbursement. $3,000 because you didn’t deduct the loss on your 2022
return. The loss didn’t reduce your tax.
Example. Your personal car had an FMV of $2,000
If the total of all the reimbursements you receive is
when it was destroyed in a collision with another car in
more than your adjusted basis in the destroyed or
2022. The accident was due to the negligence of the other CAUTION!
stolen property, you will have a gain on the casu-
driver. At the end of 2022, there was a reasonable pros-
alty or theft. If you have already taken a deduction for a
pect that the owner of the other car would reimburse you
loss and you receive the reimbursement in a later year,
in full. You didn’t have a deductible loss in 2022.
you may have to include the gain in your income for the

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later year. Include the gain as ordinary income up to the that loss by $100. This reduction applies to each total
amount of your deduction that reduced your tax for the casualty or theft loss, including those losses not attributa-
earlier year. You may be able to postpone reporting any re- ble to a federally declared disaster that are applied to re-
maining gain as explained under Postponement of Gain, duce your personal casualty gains. It doesn’t matter how
later. many pieces of property are involved in an event. Only a
single $100 reduction applies.
Actual reimbursement same as expected. If you later
Example. You have $750 deductible collision insur-
receive exactly the reimbursement you expected to re-
ance on your car. The car is damaged in a collision. The
ceive, you don’t have to include any of the reimbursement
insurance company pays you for the damage minus the
in your income and you can’t deduct any additional loss.
$750 deductible. The amount of the casualty loss is based
Example. In December 2023, your personal car was solely on the deductible. The casualty loss is $650 ($750
damaged in a flood that was a federally declared disaster. − $100) because the first $100 of a casualty loss on per-
Repairs to the car cost $950. You had $100 deductible sonal-use property isn’t deductible.
comprehensive insurance. Your insurance company Qualified disaster losses must be reduced by
agreed to reimburse you for the rest of the damage. Be- ! $500. See Disaster Area Losses, later, for more
cause you expected a reimbursement from the insurance CAUTION information.
company, you didn’t have a casualty loss deduction in
2023.
Single event. Generally, events closely related in origin
Due to the $100 rule, you can’t deduct the $100 you
cause a single casualty. It is a single casualty when the
paid as the deductible. When you receive the $850 from
damage is from two or more closely related causes, such
the insurance company in 2024, don’t report it as income.
as wind and flood damage caused by the same storm. A
single casualty may also damage two or more pieces of
property, such as a tornado that damages both your home
Deduction Limits and your car parked in your driveway.

After you have figured the amount of your casualty or theft Example 1. A tornado destroyed your pleasure boat.
loss, you must figure how much of the loss you can de- You also lost some boating equipment in the storm. Your
duct. loss was $5,000 on the boat and $1,200 on the equip-
ment. Your insurance company reimbursed you $4,500 for
The deduction for casualty and theft losses of per-
the damage to your boat. You had no insurance coverage
sonal-use property is limited. For tax years 2018 through
on the equipment. Your casualty loss is from a single
2025, personal casualty and theft losses of an individual
event and the $100 rule applies once. Figure your loss be-
are deductible only to the extent they’re attributable to a
fore applying the 10% rule (discussed later) as follows.
federally declared disaster. Personal casualty and theft
losses attributable to a federally declared disaster are Boat Equipment
subject to the $100 per casualty and 10% rules, discussed 1. Loss . . . . . . . . . . . . . . . . . . $5,000 $1,200
later. The $100 and 10% rules are also summarized in Ta- 2. Subtract insurance. . . . . . . . . 4,500 -0-
ble 2. 3. Loss after reimbursement. . . . . $ 500 $1,200
An exception to the rule above, limiting the personal 4. Total loss. . . . . . . . . . . . . . . . . . . . . . . . $1,700
casualty and theft loss deduction to losses attributable to 5. Subtract $100. . . . . . . . . . . . . . . . . . . . . 100
a federally declared disaster, applies if you have personal 6. Loss before 10% rule. . . . . . . . . . . . . . . . $1,600
casualty gains for the tax year. In this case, you may re-
duce your personal casualty gains by any casualty losses
Example 2. Thieves broke into your home in January
not attributable to a federally declared disaster. Any ex-
and stole a ring and a fur coat. You had a loss of $200 on
cess gain is used to reduce losses from a federally de-
the ring and $700 on the coat. This is a single theft. The
clared disaster. The 10% rule is applied to any federal dis-
$100 rule applies to the total $900 loss.
aster losses that remain.
Losses on business property and income-producing Example 3. In October, hurricane winds blew the roof
property aren’t subject to these rules. However, if your off your home. Flood waters caused by the hurricane fur-
casualty or theft loss involved a home you used for busi- ther damaged your home and destroyed your furniture and
ness or rented out, your deductible loss may be limited. personal car. This is considered a single casualty. The
See the instructions for Form 4684, Section B. If the casu- $100 rule is applied to your total loss from the flood waters
alty or theft loss involved property used in a passive activ- and the wind.
ity, see Form 8582, Passive Activity Loss Limitations, and
its instructions. More than one loss. If you have more than one casualty
or theft loss during your tax year, you must reduce each
loss by $100.
$100 Rule
Example. Your family car was damaged in a storm in
After you have figured your casualty or theft loss on per- January. Your loss after the insurance reimbursement was
sonal-use property, as discussed earlier, you must reduce

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$75. In February, your car was damaged in another storm. The 10% rule doesn’t apply to qualified disaster
This time your loss after the insurance reimbursement was ! losses. See Disaster Area Losses, later, for more
$90. Apply the $100 rule to each separate casualty loss. CAUTION information.
Since neither storm resulted in a loss of over $100, you
aren’t entitled to any deduction for these storms. More than one loss. If you have more than one casualty
or theft loss during your tax year, reduce each loss by any
More than one person. If two or more individuals (other
reimbursement and by $100. Then, you must reduce your
than spouses filing a joint return) have losses from the
total federal casualty losses by 10% of your AGI.
same casualty or theft, the $100 rule applies separately to
each individual. Example. In March, your car was destroyed in a flood
that was a federally declared disaster. You didn’t have in-
Example. Hurricane winds damaged your house and
surance on your car, so you didn’t receive any insurance
also damaged the personal property of your house guest.
reimbursement. Your loss on the car was $1,800. In No-
You must reduce your loss by $100. Your house guest
vember, another flood, which was also a federally de-
must reduce his or her loss by $100.
clared disaster, damaged your basement and totally de-
Married taxpayers. If you and your spouse file a joint stroyed the furniture, washer, dryer, and other items you
return, you are treated as one individual in applying the had stored there. Your loss on the basement items after
$100 rule. It doesn’t matter whether you own the property reimbursement from your insurer was $2,100. Your AGI for
jointly or separately. the year that the floods occurred is $25,000. You figure
If you and your spouse have a casualty or theft loss and your casualty loss deduction as follows.
you file separate returns, each of you must reduce your
Car Basement
loss by $100. This is true even if you own the property
jointly. If one spouse owns the property, only that spouse 1. Loss. . . . . . . . . . . . . . . . . . . $1,800 $2,100
can claim a loss deduction on a separate return. 2. Subtract $100 per incident. . . . . 100 100
If the casualty or theft loss is on property you own as 3. Loss after $100 rule. . . . . . . . . $1,700 $2,000
tenants by the entirety, each of you can figure your deduc- 4. Total loss. . . . . . . . . . . . . . . . . . . . . . . . . $3,700
tion on only one-half of the loss on separate returns. Nei- 5. Subtract 10% of $25,000 AGI. . . . . . . . . . . . 2,500
ther of you can figure your deduction on the entire loss on 6. Casualty loss deduction. . . . . . . . . . . . . . $1,200
a separate return. Each of you must reduce the loss by
$100. Married taxpayers. If you and your spouse file a joint re-
turn, you are treated as one individual in applying the 10%
More than one owner. If two or more individuals (other
rule. It doesn’t matter if you own the property jointly or
than spouses filing a joint return) have a loss on property
separately.
jointly owned, the $100 rule applies separately to each.
If you file separate returns, the 10% rule applies to each
For example, if two sisters live together in a home they
return on which a loss is claimed.
own jointly and they have a casualty loss on the home, the
$100 rule applies separately to each sister. More than one owner. If two or more individuals (other
than spouses filing a joint return) have a loss on property
10% Rule that is owned jointly, the 10% rule applies separately to
each.
You must reduce your total federal casualty losses by 10%
of your AGI. Apply this rule after you reduce each loss by Gains and losses. If you have casualty or theft gains as
$100. For more information, see the Instructions for Form well as losses to your personal-use property, you must
4684. If you have both gains and losses from casualties or compare your total gains to your total losses. Do this after
thefts, see Gains and losses, later in this discussion. you have reduced each loss by any reimbursements and
by $100 but before you have reduced the federal casualty
Example. In September, your house was damaged by losses by 10% of your AGI.
a tropical storm that was a federally declared disaster.
Your loss after insurance reimbursement was $2,000. Your Casualty or theft gains don’t include gains you
AGI for the year the loss was sustained is $29,500. Figure ! choose to postpone. See Postponement of Gain,
your casualty loss as follows. CAUTION later.

1. Loss after insurance. . . . . . . . . . . . . . . . . . . . $2,000 Losses more than gains. If your losses are more
2. Subtract $100. . . . . . . . . . . . . . . . . . . . . . . . 100 than your recognized gains, subtract your gains from your
3. Loss after $100 rule. . . . . . . . . . . . . . . . . . . . $1,900 losses and reduce the result by 10% of your AGI. The rest,
4. Subtract 10% of $29,500 AGI. . . . . . . . . . . . . . $2,950 if any, is your deductible loss from personal-use property.
5. Casualty loss deduction. . . . . . . . . . . . . . . . $ -0- If you have losses not attributable to a federally de-
clared disaster, see Line 14 in the Instructions for Form
You don’t have a casualty loss deduction because your 4684. Losses not attributable to a federally declared dis-
loss ($1,900) is less than 10% of your AGI ($2,950). aster can be used only to offset gains.
If you have qualified disaster losses, see Line 15 in the
Instructions for Form 4684 for more details.

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Example. Your  theft  loss  after  reducing  it  by  reim-                    landscaping. This year a hurricane destroyed your home. 
bursements and by $100 is $2,700. Your casualty gain is                       The  hurricane  also  damaged  the  shrubbery  and  trees  in 
$700. Because your theft loss wasn’t attributable to a fed-                   your  yard.  The  hurricane  was  your  only  casualty  or  theft 
erally  declared  disaster,  you  can  only  use  $700  of  your              loss this year. Competent appraisers valued the property 
loss to offset the $700 casualty gain.                                        as  a  whole  at  $175,000  before  the  hurricane,  but  only 
                                                                              $50,000  after  the  hurricane.  Shortly  after  the  hurricane, 
Gains more than losses.                  If your recognized gains are 
                                                                              the  insurance  company  paid  you  $95,000  for  the  loss. 
more  than  your  losses,  subtract  your  losses  from  your 
                                                                              Your AGI for this year is $70,000. You figure your casualty 
gains. The difference is treated as a capital gain and must 
                                                                              loss deduction as follows.
be  reported  on  Schedule  D  (Form  1040).  The  10%  rule 
doesn’t apply to your gains. If you have losses not attribut-                 1. Adjusted basis of the entire property (cost of 
able to a federally declared disaster, see                 Line 14 in the In-     land, building, and landscaping)  . . . . . . . . . .   $152,000
structions for Form 4684.                                                     2. FMV of entire property before hurricane      . . . . .   $175,000
                                                                              3. FMV of entire property after hurricane. . . . . .        50,000
Example. Your theft loss is $600 after reducing it by re-                     4. Decrease in FMV of entire property
imbursements and by $100. Your casualty gain is $1,600.                           (line 2 − line 3)                                       $125,000
Because your gain is more than your loss, you must report                     5. Loss (smaller of line 1 or line 4). . . . . . . . . .    $125,000
the $1,000 net gain ($1,600 − $600) on Schedule D (Form                       6. Subtract insurance . . . . . . . . . . . . . . . . . .   95,000
1040).                                                                        7. Loss after reimbursement. . . . . . . . . . . . . .      $30,000
                                                                              8. Subtract $100. . . . . . . . . . . . . . . . . . . . .   100
More  information.             For  information  on  how  to  figure          9. Loss after $100 rule. . . . . . . . . . . . . . . . .    $29,900
recognized gains, see Figuring a Gain, later.                                 10. Subtract 10% of $70,000 AGI. . . . . . . . . . .        7,000
                                                                              11. Casualty loss deduction. . . . . . . . . . . . . .      $ 22,900
Figuring the Deduction
                                                                              Personal  property.     Personal  property  is  any  property 
Generally,  you  must  figure  your  loss  separately  for  each              that isn’t real property. If your personal property is stolen 
item  stolen,  damaged,  or  destroyed.  However,  a  special                 or is damaged or destroyed by a casualty, you must figure 
rule applies to real property you own for personal use.                       your loss separately for each item of property. Then com-
Real  property.  In  figuring  a  loss  to  real  estate  you  own            bine these separate losses to figure the total loss. Reduce 
for personal use, all improvements (such as buildings and                     the total loss by $100 and 10% of your AGI to figure the 
ornamental  trees  and  the  land  containing  the  improve-                  loss deduction.

ments) are considered together.                                               Example 1.     In August, a storm that was determined to 
Example  1.      In  June,  a  tornado  destroyed  your  lake-                be a federally declared disaster destroyed your pleasure 
side cottage, which cost $144,800 (including $14,500 for                      boat, which cost $18,500. This was your only casualty or 
the land) several years ago. (Your land wasn’t damaged.)                      theft  loss  for  the  year.  Its  FMV  immediately  before  the 
This was your only casualty or theft loss for the year. The                   storm was $17,000. You had no insurance, but were able 
FMV of the property immediately before the tornado was                        to salvage the motor of the boat and sell it for $200. Your 
$180,000  ($145,000  for  the  cottage  and  $35,000  for  the                AGI for the year the casualty occurred is $70,000.
land).  The  FMV  immediately  after  the  tornado  was                       Although the motor was sold separately, it is part of the 
$35,000 (value of the land). You collected $130,000 from                      boat and not a separate item of property. You figure your 
the insurance company. Your AGI for the year the tornado                      casualty loss deduction as follows.
occurred is $80,000. Your deduction for the casualty loss                     1. Adjusted basis (cost in this example)    . . . . . . .   $18,500
is $6,700, figured in the following manner.
                                                                              2. FMV before storm   . . . . . . . . . . . . . . . . . . . $17,000
1. Adjusted basis of the entire property (cost in                             3. FMV after storm. . . . . . . . . . . . . . . . . . . .   200
    this example). . . . . . . . . . . . . . . . . . . . . .      $144,800    4. Decrease in FMV (line 2 − line 3). . . . . . . . . .     $16,800
2. FMV of entire property before tornado         . . . . . .      $180,000    5. Loss (smaller of line 1 or line 4). . . . . . . . . . .  $16,800
3. FMV of entire property after tornado. . . . . . .              35,000      6. Subtract insurance . . . . . . . . . . . . . . . . . .   -0-
4. Decrease in FMV of entire property                                         7. Loss after reimbursement. . . . . . . . . . . . . .      $16,800
    (line 2 − line 3). . . . . . . . . . . . . . . . . . . . .    $145,000
                                                                              8. Subtract $100. . . . . . . . . . . . . . . . . . . . . . 100
5. Loss (smaller of line 1 or line 4). . . . . . . . . .          $144,800    9. Loss after $100 rule. . . . . . . . . . . . . . . . . .  $16,700
6. Subtract insurance    . . . . . . . . . . . . . . . . . .      130,000     10. Subtract 10% of $70,000 AGI. . . . . . . . . . . .      7,000
7. Loss after reimbursement. . . . . . . . . . . . . .            $14,800     11. Casualty loss deduction. . . . . . . . . . . . . .      $ 9,700
8. Subtract $100. . . . . . . . . . . . . . . . . . . . .         100
9. Loss after $100 rule. . . . . . . . . . . . . . . . .          $14,700
10. Subtract 10% of $80,000 AGI. . . . . . . . . . .              8,000       Example 2.     In June, you were involved in an auto acci-
11. Casualty loss deduction. . . . . . . . . . . . . .            $ 6,700     dent that totally destroyed your personal car and your anti-
                                                                              que  pocket  watch.  You  had  bought  the  car  for  $30,000. 
                                                                              The FMV of the car just before the accident was $17,500. 
Example  2.      You  bought  your  home  a  few  years  ago. 
                                                                              Its  FMV  just  after  the  accident  was  $180  (scrap  value). 
You paid $150,000 ($10,000 for the land and $140,000 for 
                                                                              Your insurance company reimbursed you $16,000.
the  house).  You  also  spent  an  additional  $2,000  for 

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Your  watch  wasn’t  insured.  You  had  purchased  it  for                  1. Adjusted basis of real property (cost in this 
$250.  Its  FMV  just  before  the  accident  was  $500.  In  the                  example). . . . . . . . . . . . . . . . . . . . . . .    $164,000
same  year,  you  also  had  a  $2,000  casualty  gain  and  a               2. FMV of real property before hurricane. . . . .              $170,000
separate  $5,000  casualty  loss  attributable  to  a  federally             3. FMV of real property after hurricane. . . . . .             100,000
declared disaster. Your AGI for the year is $97,000. Your                    4. Decrease in FMV of real property 
casualty loss deduction is zero, figured as follows.                               (line 2 − line 3). . . . . . . . . . . . . . . . . . . . $70,000
                                                                             5. Loss on real property (smaller of line 1 or 
                                                            Car       Watch        line 4). . . . . . . . . . . . . . . . . . . . . . . . . $70,000
1. Adjusted basis (cost). . . . . . . . . . .               $30,000   $250   6. Subtract insurance      . . . . . . . . . . . . . . . . .   50,000
                                                                             7. Loss on real property after reimbursement             . .   $20,000
2. FMV before accident. . . . . . . . . . .                 $17,500   $500
3. FMV after accident. . . . . . . . . . . .                    180   -0-    8. Loss on furnishings       . . . . . . . . . . . . . . . . . $600
4. Decrease in FMV (line 2 − line 3)        . . . .         $17,320   $500   9. Subtract insurance      . . . . . . . . . . . . . . . . .   -0-
                                                                             10. Loss on furnishings after reimbursement            . . . . $600
5. Loss (smaller of line 1 or line 4). . . . .              $17,320   $250
6. Subtract insurance. . . . . . . . . . . .                16,000    -0-    11. Total loss (line 7 plus line 10). . . . . . . . . . .      $20,600
7. Loss after reimbursement. . . . . . . .                  $1,320    $250   12. Subtract $100. . . . . . . . . . . . . . . . . . . .       100
                                                                             13. Loss after $100 rule . . . . . . . . . . . . . . . .       $20,500
8. Total loss. . . . . . . . . . . . . . . . . . . . . . . . . . .    $1,570 14. Subtract 10% of $65,000 AGI. . . . . . . . . . .           6,500
9. Subtract $100    . . . . . . . . . . . . . . . . . . . . . . . .   100    15. Casualty loss deduction. . . . . . . . . . . . .           $14,000
10. Loss not attributable to a federally declared disaster 
      after $100 rule. . . . . . . . . . . . . . . . . . . . . . . .  $1,470
11. Casualty gain. . . . . . . . . . . . . . . . . . . . . . . . .    $2,000 Property used partly for business and partly for per-
12. Casualty loss not attributable to a federally declared                   sonal  purposes.         When  property  is  used  partly  for  per-
      disaster. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,470  sonal purposes and partly for business or income-produc-
13. Remaining gain after offsetting the loss not                             ing purposes, the casualty or theft loss deduction must be 
      attributable to a federally declared disaster                          figured separately for the personal-use portion and for the 
      (line 11 – line 12; if zero or less, enter -0-). . . . . . .    $530
14. Casualty loss attributable to a federally declared                       business  or  income-producing  portion.  You  must  figure 
      disaster. . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,000 each  loss  separately  because  the  losses  attributed  to 
15. Subtract $100   . . . . . . . . . . . . . . . . . . . . . . . .   100    these two uses are figured in two different ways. When fig-
16. Loss after $100 rule    . . . . . . . . . . . . . . . . . . . . . $4,900 uring each loss, allocate the total cost or basis, the FMV 
17. Subtract remaining gain (line 13). . . . . . . . . . . . .        530    before and after the casualty or theft loss, and the insur-
18. Loss after subtracting gain. . . . . . . . . . . . . . . . .      $4,370 ance  or  other  reimbursement  between  the  business  and 
19. Subtract 10% of $97,000 AGI         . . . . . . . . . . . . . . . 9,700  personal use of the property. The $100 rule and the 10% 
20. Casualty loss deduction attributable to a                                rule  apply  only  to  the  casualty  or  theft  loss  on  the  per-
      federally declared disaster. . . . . . . . . . . . . . .         $ -0- sonal-use portion of the property.

Both  real  and  personal  properties.                    When  a  casualty  Example.         You own a building that you constructed on 
involves both real and personal properties, you must fig-                    leased land. You use half of the building for your business 
ure the loss separately for each type of property. However,                  and you live in the other half. The cost of the building was 
you apply a single $100 reduction to the total loss. Then,                   $400,000. You made no further improvements or additions 
you apply the 10% rule to figure the casualty loss deduc-                    to it.
tion.                                                                        In March, a flood that was determined to be a federally 
                                                                             declared disaster damaged the entire building. The FMV 
Example.        In  July,  a  hurricane,  which  was  a  federally           of the building was $380,000 immediately before the flood 
declared  disaster,  damaged  your  home,  which  cost  you                  and $320,000 afterwards. Your insurance company reim-
$164,000  including  land.  The  FMV  of  the  property  (both               bursed  you  $40,000  for  the  flood  damage.  Depreciation 
building  and  land)  immediately  before  the  storm  was                   on  the  business  part  of  the  building  before  the  flood  to-
$170,000  and  its  FMV  immediately  after  the  storm  was                 taled $24,000. Your adjusted gross income for the year the 
$100,000.  Your  household  furnishings  were  also  dam-                    flood occurred is $125,000.
aged. You separately figured the loss on each damaged                        You  have  a  deductible  business  casualty  loss  of 
household item and arrived at a total loss of $600.                          $10,000.  You  don’t  have  a  deductible  personal  casualty 
You collected $50,000 from the insurance company for                         loss because of the 10% rule. You figure your loss as fol-
the damage to your home, but your household furnishings                      lows.
weren’t insured. Your AGI for the year the hurricane occur-
red  is  $65,000.  You  figure  your  casualty  loss  deduction 
from the hurricane in the following manner.

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Business Part Personal Part placement property, you may be able to postpone report-
1. Cost (total $400,000). . . . . . $200,000 $200,000 ing the excess gain. See Postponement of Gain, later.
2. Subtract depreciation. . . . . . 24,000 -0-
3. Adjusted basis. . . . . . . . . . $176,000 $200,000 Reporting a gain. You must generally report your gain as
4. FMV before flood (total income in the year you receive the reimbursement. How-
$380,000). . . . . . . . . . . . $190,000 $190,000 ever, you don’t have to report your gain if you meet certain
5. FMV after flood (total requirements and choose to postpone reporting the gain
$320,000). . . . . . . . . . . . 160,000 160,000 according to the rules explained under Postponement of
6. Decrease in FMV Gain next.
(line 4 − line 5). . . . . . . . . . $30,000 $30,000
7. Loss (smaller of line 3 or For information on how to report a gain, see How To
line 6). . . . . . . . . . . . . . . $30,000 $30,000 Report Gains and Losses, later.
8. Subtract insurance. . . . . . . 20,000 20,000
If you have a casualty or theft gain on per-
9. Loss after reimbursement. . . $10,000 $10,000
10. Subtract $100 on personal-use ! sonal-use property that you choose to postpone
property. . . . . . . . . . . . . -0- 100 CAUTION reporting (as explained next) and you also have
11. Loss after $100 rule. . . . . . . $10,000 $9,900 another casualty or theft loss on personal-use property,
12. Subtract 10% of $125,000 AGI don’t consider the gain you are postponing when figuring
on personal-use property . . . -0- 12,500
your casualty or theft loss deduction. See 10% Rule under
13. Deductible business loss. . $10,000
Deduction Limits, earlier.
14. Deductible personal loss. . . . . . . . . . . . . . $ -0-

Postponement of Gain

Don’t report a gain if you receive reimbursement in the
Figuring a Gain form of property similar or related in service or use to the
destroyed or stolen property. Your basis in the new prop-
If you receive an insurance payment or other reimburse- erty is generally the same as your adjusted basis in the
ment that is more than your adjusted basis in the de- property it replaces.
stroyed, damaged, or stolen property, you have a gain
from the casualty or theft. Your gain is figured as follows. You must ordinarily report the gain on your stolen or de-
stroyed property if you receive money or unlike property
• The amount you receive (discussed next), minus as reimbursement. However, you can choose to postpone
• Your adjusted basis in the property at the time of the reporting the gain if you purchase property that is similar
casualty or theft. See Adjusted Basis, earlier, for more or related in service or use to the stolen or destroyed
information. property within a specified replacement period, discussed
Even if the decrease in FMV of your property is smaller later. You can also choose to postpone reporting the gain
than the adjusted basis of your property, use your adjus- if you purchase a controlling interest (at least 80%) in a
ted basis to figure the gain. corporation owning property that is similar or related in
service or use to the property. See Controlling interest in a
Amount you receive. The amount you receive includes corporation, later.
any money plus the value of any property you receive mi-
nus any expenses you incur in obtaining reimbursement. It If you have a gain on damaged property, you can post-
also includes any reimbursement used to pay off a mort- pone reporting the gain if you spend the reimbursement to
gage or other lien on the damaged, destroyed, or stolen restore the property.

property. To postpone reporting all the gain, the cost of your re-
Example. A hurricane destroyed your personal resi- placement property must be at least as much as the reim-
dence and the insurance company awarded you bursement you receive. If the cost of the replacement
$145,000. You received $140,000 in cash. The remaining property is less than the reimbursement, you must include
$5,000 was paid directly to the holder of a mortgage on the gain in your income up to the amount of the unspent
the property. The amount you received includes the reimbursement.

$5,000 reimbursement paid on the mortgage. Example. In 1970, you bought an oceanfront cottage
Main home destroyed. If you have a gain because your for your personal use at a cost of $18,000. You made no
main home was destroyed, you can generally exclude the further improvements or additions to it. When a storm de-
gain from your income as if you had sold or exchanged stroyed the cottage in January, the cottage was worth
your home. You may be able to exclude up to $250,000 of $250,000. You received $146,000 from the insurance
the gain (up to $500,000 if married filing jointly). To ex- company in March. You had a gain of $128,000 ($146,000
clude a gain, you must generally have owned and lived in − $18,000).
the property as your main home for at least 2 years during You spent $144,000 to rebuild the cottage. Because
the 5-year period ending on the date it was destroyed. For this is less than the insurance proceeds received, you
information on this exclusion, see Pub. 523. If your gain is must include $2,000 ($146,000 − $144,000) in your in-
more than the amount you can exclude, but you buy re- come.

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Buying replacement property from a related person. finished before the end of the replacement period. See
You can’t postpone reporting a gain from a casualty or Replacement Period, later.
theft if you buy the replacement property from a related
person (discussed later). This rule applies to the following Similar or related in service or use. Replacement
taxpayers. property must be similar or related in service or use to the
property it replaces.
1. C corporations.
Timber loss. Standing timber (not land) you bought
2. Partnerships in which more than 50% of the capital or with the proceeds from the sale of timber downed by a
profits interests is owned by C corporations. casualty (such as high winds, earthquakes, or volcanic
3. All others (including individuals, partnerships (other eruptions) qualifies as replacement property. If you bought
than those in (2)), and S corporations) if the total real- the standing timber within the specified replacement pe-
ized gain for the tax year on all destroyed or stolen riod, you can postpone reporting the gain.
properties on which there are realized gains is more Owner-user. If you are an owner-user, “similar or rela-
than $100,000. ted in service or use” means that replacement property
For casualties and thefts described in (3) above, gains must function in the same way as the property it replaces.
can’t be offset by any losses when determining whether
Example. Your home was destroyed by fire and you in-
the total gain is more than $100,000. If the property is
vested the insurance proceeds in a grocery store. Your re-
owned by a partnership, the $100,000 limit applies to the
placement property isn’t similar or related in service or use
partnership and each partner. If the property is owned by
to the destroyed property. To be similar or related in serv-
an S corporation, the $100,000 limit applies to the S cor-
ice or use, your replacement property must also be used
poration and each shareholder.
by you as your home.
Exception. This rule doesn’t apply if the related per-
Main home in disaster area. Special rules apply to
son acquired the property from an unrelated person within
replacement property related to the damage or destruc-
the period of time allowed for replacing the destroyed or
tion of your main home (or its contents) if located in a fed-
stolen property.
erally declared disaster area. For more information, see
Related persons. Under this rule, related persons in- Gains Realized on Homes in Disaster Areas, later.
clude, for example, a parent and child, a brother and sis-
Owner-investor. If you are an owner-investor, “similar
ter, a corporation and an individual who owns more than
or related in service or use” means that any replacement
50% of its outstanding stock, and two partnerships in
property must have a similar relationship of services or
which the same C corporations own more than 50% of the
uses to you as the property it replaces. You decide this by
capital or profits interests. For more information on related
determining all of the following.
persons, see Nondeductible Loss under Sales and Ex-
changes Between Related Persons in chapter 2 of Pub. • Whether the properties are of similar service to you.
544. The nature of the business risks connected with the
•
Death of a taxpayer. If a taxpayer dies after having a properties.
gain but before buying replacement property, the gain • What the properties demand of you in the way of man-
must be reported for the year in which the decedent real- agement, service, and relations to your tenants.
ized the gain. The executor of the estate or the person
succeeding to the funds from the casualty or theft can’t Example. You owned land and a building you rented to
postpone reporting the gain by buying replacement prop- a manufacturing company. The building was destroyed by
erty. a tornado. During the replacement period, you had a new
building constructed. You rented out the new building for
Replacement Property use as a wholesale grocery warehouse. Because the re-
placement property is also rental property, the two proper-
You must buy replacement property for the specific pur- ties are considered similar or related in service or use if
pose of replacing your destroyed or stolen property. Prop- there is a similarity in all of the following areas.
erty you acquire as a gift or inheritance doesn’t qualify. • Your management activities.
You don’t have to use the same funds you receive as • The amount and kind of services you provide to your
reimbursement for your old property to acquire the re- tenants.
placement property. If you spend the money you receive • The nature of your business risks connected with the
from the insurance company for other purposes, and bor- properties.
row money to buy replacement property, you can still post-
pone reporting the gain if you meet the other require- Business or income-producing property located in
ments. a federally declared disaster area. If your destroyed
business or income-producing property was located in a
Advance payment. If you pay a contractor in advance to federally declared disaster area, any tangible replacement
replace your destroyed or stolen property, you aren’t con- property you acquire for use in any business is treated as
sidered to have bought replacement property unless it is similar or related in service or use to the destroyed

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property. The replacement property doesn’t have to be lo- within the replacement period, you can postpone reporting
cated in the federally declared disaster area. For more in- the gain. You will have reinvested all the reimbursement
formation, see Disaster Area Losses, later. (including your entire gain) in the new rental home. Your
basis for the new rental home will be $105,000 ($110,000
Controlling interest in a corporation. You can replace cost − $5,000 postponed gain).
property by acquiring a controlling interest in a corporation
that owns property similar or related in service or use to Replacement Period
your damaged, destroyed, or stolen property. You can
postpone reporting your entire gain if the cost of the stock
To postpone reporting your gain, you must buy replace-
that gives you a controlling interest is at least as much as
ment property within a specified period of time. This is the
the amount received (reimbursement) for your property.
replacement period.
You have a controlling interest if you own stock having at
least 80% of the combined voting power of all classes of
The replacement period begins on the date your prop-
voting stock and at least 80% of the total number of
erty was damaged, destroyed, or stolen.
shares of all other classes of stock.
Basis adjustment to corporation’s property. The The replacement period ends 2 years after the close of
basis of property held by the corporation at the time you the first tax year in which any part of your gain is realized.
acquired control must be reduced by the amount of your
postponed gain, if any. You aren’t required to reduce the Example. You are a calendar year taxpayer. While you
adjusted basis of the corporation’s properties below your were on vacation, a valuable piece of antique furniture that
adjusted basis in the corporation’s stock (determined after cost $2,200 was stolen from your home. You discovered
reduction by the amount of your postponed gain). the theft when you returned home on July 7, 2023. Your in-
Allocate this reduction to the following classes of prop- surance company investigated the theft and didn’t settle
erty in the order shown below. your claim until January 22, 2024, when they paid you
$3,000. You first realized a gain from the reimbursement
1. Property that is similar or related in service or use to for the theft during 2024, so you have until December 31,
the destroyed or stolen property. 2026, to replace the property.
2. Depreciable property not reduced in (1).
Main home in disaster area. For your main home (or its
3. All other property. contents) located in a federally declared disaster area, the
replacement period generally ends 4 years after the close
If two or more properties fall in the same class, allocate
of the first tax year in which any part of your gain is real-
the reduction to each property in proportion to the adjus-
ized. See Disaster Area Losses, later.
ted bases of all the properties in that class. The reduced
basis of any single property can’t be less than zero. Example. You are a calendar year taxpayer. A hurri-
cane destroyed your home in September 2023. In Decem-
Main home replaced. If your gain from the reimburse-
ber 2023, the insurance company paid you $3,000 more
ment you receive because of the destruction of your main
than the adjusted basis of your home. The area in which
home is more than the amount you can exclude from your
your home is located isn’t a federally declared disaster
income (see Main home destroyed under Figuring a Gain,
area. You first realized a gain from the reimbursement for
earlier), you can postpone reporting the excess gain by
the casualty in 2023, so you have until December 31,
buying replacement property that is similar or related in
2025, to replace the property. If your home had been in a
service or use. To postpone reporting all the excess gain,
federally declared disaster area, you would have until De-
the replacement property must cost at least as much as
cember 31, 2027, to replace the property.
the amount you received because of the destruction mi-
nus the excluded gain. Extension. You can apply for an extension of the replace-
Also, if you postpone reporting any part of your gain un- ment period. Send your written application to the Internal
der these rules, you are treated as having owned and Revenue Service Center where you file your tax return.
used the replacement property as your main home for the See your tax return instructions or go to Where To File
period you owned and used the destroyed property as Paper Tax Returns With or Without a Payment on IRS.gov
your main home. for the address. Your application must contain all the de-
tails about the need for the extension. You should apply
Basis of replacement property. You must reduce the
before the end of the replacement period.
basis of your replacement property (its cost) by the
However, you can file an application within a reasona-
amount of postponed gain. In this way, tax on the gain is
ble time after the replacement period ends if you have a
postponed until you dispose of the replacement property.
good reason for the delay. An extension may be granted if
Example. A fire destroyed your rental home that you you can show that there is reasonable cause for not mak-
never lived in. The insurance company reimbursed you ing the replacement within the replacement period.
$67,000 for the property, which had an adjusted basis of Ordinarily, requests for extensions aren’t made or gran-
$62,000. You had a gain of $5,000 from the casualty. If ted until near the end of the replacement period or the ex-
you have another rental home constructed for $110,000 tended replacement period. Extensions are usually limited
to a period of not more than 1 year. The high market value

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or scarcity of replacement property isn’t sufficient grounds extent the $215,000 of insurance proceeds exceeds the
for granting an extension. If your replacement property is amount you invest in a replacement home and its replace-
being constructed and you clearly show that the construc- ment contents.
tion can’t be completed within the replacement period, you See Pub. 523 for more information on gain that may be
may be granted an extension of the period. excluded on a sale, including the receipt of insurance pro-
ceeds for a destruction of your home.
Gains Realized on Homes in Disaster Areas To postpone the gain, you must purchase the replace-
ment property before 2028. Your basis in the replacement
The following rules apply if your main home was located in property equals its cost decreased by the amount of any
an area declared by the President of the United States to postponed gain.
warrant federal assistance as the result of a disaster, and
the home or any of its contents were damaged or de- How To Postpone a Gain
stroyed due to the disaster. These rules also apply to rent-
ers who receive insurance proceeds for damaged or de- You postpone reporting your gain from a casualty or theft
stroyed property in a rented home that is their main home. by reporting your choice on your tax return for the year you
have the gain. You have the gain in the year you receive
1. No gain is recognized on any insurance proceeds re-
insurance proceeds or other reimbursements that result in
ceived for unscheduled personal property that was
a gain.
part of the contents of the home.
2. Any other insurance proceeds you receive for the If a partnership or a corporation owns the stolen or de-
home or its contents are treated as received for a sin- stroyed property, only the partnership or corporation can
gle item of property, and any replacement property choose to postpone reporting the gain.
you purchase that is similar or related in service or
use to the home or its contents is treated as similar or Required statement. You should attach a statement to
related in service or use to that single item of property. your return for the year you have the gain. This statement
Therefore, you can choose to recognize gain only to should include the following.
the extent the insurance proceeds treated as received • The date and details of the casualty or theft.
for that single item of property exceed the cost of the
replacement property. • The insurance or other reimbursement you received
from the casualty or theft.
3. If you choose to postpone any gain from the receipt of
• How you figured the gain.
insurance or other reimbursement for your main home
or any of its contents, the period in which you must Replacement property acquired before return filed.
purchase replacement property is extended until 4 If you acquire replacement property before you file your re-
years after the end of the first tax year in which any turn for the year you have the gain, your statement should
part of the gain is realized. also include detailed information about all of the following.
For details on how to postpone gain, see How To Post- • The replacement property.
pone a Gain, later. • The postponed gain.
Example. Your main home and its contents were com- • The basis adjustment that reflects the postponed gain.
pletely destroyed in 2023 by a tornado in a federally de-
• Any gain you are reporting as income.
clared disaster area. In 2023, you received insurance pro-
ceeds of $200,000 for the home, $25,000 for unscheduled Replacement property acquired after return filed.
personal property in your home, $5,000 for jewelry, and If you intend to acquire replacement property after you file
$10,000 for a stamp collection. your return for the year in which you have the gain, your
No gain is recognized on the $25,000 of insurance pro- statement should also state that you are choosing to re-
ceeds you received for the unscheduled personal prop- place the property within the required replacement period.
erty. You should then attach another statement to your return
The jewelry and stamp collection were kept in your for the year in which you acquire the replacement prop-
home and were scheduled property on your insurance erty. This statement should contain detailed information
policy. Your home and its replacement contents are con- on the replacement property.
sidered a single item of property for the purpose of recog- If you acquire part of your replacement property in one
nizing gain on the involuntary conversion your home and year and part in another year, you must make a statement
its contents. for each year. The statement should contain detailed infor-
If you reinvest the remaining insurance proceeds of mation on the replacement property acquired in that year.
$215,000 in a replacement home and its replacement
contents, you can elect to postpone any gain on your Substituting replacement property. Once you have ac-
home, jewelry, or stamp collection. quired qualified replacement property that you designate
If you reinvest less than the remaining $215,000 of in- as replacement property in a statement attached to your
surance proceeds in a replacement home and its replace- tax return, you can’t later substitute other qualified re-
ment contents, you may have to recognize any gain to the placement property. This is true even if you acquire the
other property within the replacement period. However, if

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you discover that the original replacement property wasn’t Losses. Generally, you can deduct a casualty loss that
qualified replacement property, you can (within the re- isn’t reimbursable only in the tax year in which the casu-
placement period) substitute the new qualified replace- alty occurred. This is true even if you don’t repair or re-
ment property. place the damaged property until a later year. (However,
see Disaster Area Losses, later, for an exception.)
Amended return. You must file an amended return (indi- You can deduct theft losses that aren’t reimbursable
viduals use Form 1040-X) for the tax year of the gain in ei- only in the year you discover your property was stolen.
ther of the following situations. If in the year of the casualty there is a claim for reim-
• You don’t acquire replacement property within the re- bursement with a reasonable prospect of recovery, the
quired replacement period plus extensions. On this loss isn’t sustained until you know with reasonable cer-
amended return, you must report the gain and pay any tainty whether such reimbursement will be received. If you
additional tax due. aren’t sure whether part of your casualty or theft loss will
be reimbursed, don’t deduct that part until the tax year
• You acquire replacement property within the required when you become reasonably certain that it won’t be reim-
replacement period plus extensions, but at a cost less bursed. The later tax year is when your loss is sustained.
than the amount you receive for the casualty or theft.
On this amended return, you must report the portion of Loss on deposits. If your loss is a loss on deposits at
the gain that can’t be postponed and pay any addi- an insolvent or bankrupt financial institution, see Loss on
tional tax due. Deposits, earlier.
Three-year limit. The period for assessing tax on any Lessee’s loss. If you lease property from someone
gain ends 3 years after the date you notify the director of else, you can deduct a loss on the property in the year
the IRS for your area of any of the following. your liability for the loss is determined. This is true even if
the loss occurred or the liability was paid in a different
• You replaced the property. year. You aren’t entitled to a deduction until your liability
• You don’t intend to replace the property. under the lease can be determined with reasonable accu-
racy. Your liability can be determined when a claim for re-
• You didn’t replace the property within the replacement covery is settled, adjudicated, or abandoned.
period.

Changing your mind. You can change your mind about
whether to report or to postpone reporting your gain at any Disaster Area Losses
time before the end of the replacement period.
This section discusses the special rules that apply to fed-
Example. Your property was destroyed in 2022 due to erally declared disaster area losses. It contains informa-
a federally declared disaster. Your insurance company re- tion on when you can deduct your loss, how to claim your
imbursed you $10,000, of which $5,000 was a gain. You loss, how to treat your home in a disaster area, and what
reported the $5,000 gain on your return for 2022 (the year tax deadlines may be postponed. It also lists Federal
you realized the gain) and paid the tax due. In 2023, you Emergency Management Agency (FEMA) phone num-
bought replacement property. Your replacement property bers. (See Contacting the Federal Emergency Manage-
cost $9,000. Because you reinvested all but $1,000 of ment Agency (FEMA), later.)
your reimbursement, you can now postpone reporting
$4,000 ($5,000 − $1,000) of your gain. A disaster loss is a loss that occurred in an area deter-
To postpone reporting your gain, file an amended return mined by the President of the United States to warrant as-
for 2022 using Form 1040-X. You should attach an explan- sistance by the federal government under the Stafford Act
ation showing that you previously reported the entire gain and that is attributable to a federally declared disaster.
from the casualty but you now want to report only the part Disaster areas include areas warranting public or individ-
of the gain ($1,000) equal to the part of the reimbursement ual assistance (or both). A federally declared disaster in-
not spent for replacement property. cludes a major disaster or emergency declaration.
A list of the areas warranting public or individual
TIP assistance (or both) under the Stafford Act is
available at FEMA.gov/Disasters.
When To Report Gains and

Losses FEMA disaster declaration numbers. If you are report-
ing a casualty or theft loss attributable to a federally de-
Gains. If you receive an insurance or other reimburse- clared disaster, check the box and enter the DR or EM
ment that is more than your adjusted basis in the de- declaration number assigned by FEMA in the space provi-
stroyed or stolen property, you have a gain from the casu- ded above line 1 on your 2023 Form 4684. A list of feder-
alty or theft. You must include this gain in your income in ally declared disasters and FEMA disaster declaration
the year you receive the reimbursement, unless you numbers is available at FEMA.gov/Disasters.
choose to postpone reporting the gain, as explained ear- The FEMA disaster declaration number consists of the
lier. letters “DR” and four numbers, or the letters “EM” and four
numbers. For example, enter “DR-4712” in the respective

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entry  spaces  for  the  Tennessee  Severe  Thunderstorms           Revoking  the  election  to  deduct  the  loss  in  the 
and Possible Strong Tornadoes.                                      preceding  year.  Complete  Part  II  of  Section  D  on  the 
                                                                    2022 Form 4684 if you want to revoke a 2023 disaster year 
Disaster year. The disaster year is the tax year in which           election to deduct a federally declared disaster loss in the 
you sustained the loss attributable to a federally declared         preceding tax year. Attach the completed Section D to an 
disaster. Generally, a disaster loss is sustained in the year       amended  return  for  the  preceding  year  (that  is,  to  an 
the disaster occurred. However, a disaster loss may also            amended 2022 return for the revocation of a 2023 disaster 
be sustained in a year after the disaster occurred. For ex-         year election).
ample, if a claim for reimbursement exists for which there          Your  amended  return  revoking  the  election  must  be 
is a reasonable prospect of recovery, no part of the loss           filed  on  or  before  the  date  that  is  90  days  after  the  due 
for which reimbursement may be received is sustained un-            date for making the election and on or before the date you 
til it can be ascertained with reasonable certainty whether         file any return or amended return for the year that includes 
you will be reimbursed.                                             the disaster loss.
                                                                    Your  amended  return  (revoking  the  previous  disaster 
When to deduct the loss.    You must generally deduct a 
                                                                    loss election) should refigure your tax liability as a result of 
casualty loss in the disaster year. However, if you have a 
                                                                    revoking  the  election.  You  must  pay  or  make  arrange-
casualty loss from a federally declared disaster that occur-
                                                                    ments to pay any tax and interest due as a result of the 
red  in  an  area  warranting  public  or  individual  assistance 
                                                                    revocation.
(or both), you can elect to deduct that loss on your return 
or amended return for the tax year immediately preceding            Qualified disaster losses.    A qualified disaster loss is an 
the disaster year. If you make this election, the loss is trea-     individual’s casualty or theft loss of personal-use property 
ted  as  having  occurred  in  the  preceding  year.  A  list  of   that is attributable to a major disaster that was declared by 
areas warranting public or individual assistance (or both)          the President during the period between January 1, 2020, 
is available at the FEMA website at FEMA.gov/Disasters.             and February 25, 2021. Also, this disaster must have an 
You must make the election to take your casualty loss               incident period that began on or after December 28, 2019, 
for the disaster in the preceding year on or before the date        and  on  or  before  December  27,  2020,  and  must  have 
that is 6 months after the regular due date for filing your         ended no later than January 26, 2021. The definition of a 
original return (without extensions) for the disaster year. If      qualified disaster loss does not extend to any major disas-
you are a calendar year taxpayer, you have until October            ter which has been declared only by reason of COVID-19 
15, 2024, to amend your 2022 tax return to claim a casu-            (because the incident period for COVID-19 extended be-
alty loss that occurred during 2023.                                yond January 26, 2021). Thus, given that the incident pe-
                                                                    riod for COVID-19 generally ran from January 20, 2020, to 
How to deduct your loss in the preceding year.  If you 
                                                                    May 11, 2023, a loss due to COVID-19 is not a qualified 
have already filed your return for the preceding year, you 
                                                                    disaster loss.
can  elect  to  claim  a  disaster  loss  against  that  year’s  in-
                                                                    A  qualified  disaster  loss  also  includes  an  individual’s 
come  by  filing  an  amended  return.  Individuals  file  an 
                                                                    casualty or theft loss of personal-use property that is at-
amended return on Form 1040-X. (See How to report the 
                                                                    tributable to:
loss on Form 1040-X, later.)
To make this election, complete Part I of Section D on              • A major disaster declared by the President under sec-
the 2022 Form 4684 and attach it to your 2022 return or               tion 401 of the Stafford Act in 2016;
amended return that claims the disaster loss deduction.             • Hurricane Harvey;
You  must  make  an  election  to  deduct  the  loss  in  the 
preceding year on or before the date that is 6 months after         • Tropical Storm Harvey;
the regular due date for filing your original return (without       • Hurricane Irma;
extensions)  for  the  disaster  year.  For  individual  calendar 
year  taxpayers,  the  deadline  for  electing  to  take  a  2023   • Hurricane Maria;
disaster loss on your 2022 tax return is October 15, 2024.          • The California wildfires in 2017 and January 2018; 
See the 2022 Instructions for Form 4684 for more detailed             and
information on how to claim these losses on your original 
                                                                    • A major disaster that was declared by the President 
or amended 2022 return.
                                                                      under section 401 of the Stafford Act and that occur-
If you claimed a deduction for a disaster loss on the tax 
                                                                      red in 2018 and before December 21, 2019, and con-
return for the disaster year and you wish to deduct the loss 
                                                                      tinued no later than January 19, 2020 (except those 
in the preceding year, you must file an amended return to 
                                                                      attributable to the California wildfires in January 2018 
remove the previously deducted loss on or before the date 
                                                                      that received prior relief).
you  file  the  return  or  amended  return  for  the  preceding 
year that includes the disaster loss deduction.                     See IRS.gov/DisasterTaxRelief for  date-specific  decla-
                                                                    rations associated with these disasters and for more infor-
    Claiming a qualifying disaster loss on the previous             mation.
TIP year’s return may result in a lower tax for that year, 
    often producing or increasing a cash refund.                    Note.  If you suffered a qualified disaster loss, you are 
                                                                    eligible to claim a casualty loss deduction and to elect to 
                                                                    claim the loss in the preceding tax year.

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Increased standard deduction reporting. If you have a value is the difference between your home’s FMV immedi-
net qualified disaster loss on Form 4684, line 15, and you ately before the disaster and immediately after the disas-
aren’t itemizing your deductions, you can claim an in- ter.
creased standard deduction using Schedule A (Form
Figuring the loss deduction. When electing to de-
1040) by doing the following.
duct your loss in the preceding year, unless you have a
1. Enter the amount from Form 4684, line 15, on the dot- qualified disaster loss, discussed earlier, you must figure
ted line next to line 16 on Schedule A and the descrip- the loss under the usual rules for casualty losses, as if it
tion “Net Qualified Disaster Loss.” occurred in the year preceding the disaster.

2. Also, enter on the dotted line next to line 16 your Example. A hurricane damaged your main home and
standard deduction amount and the description destroyed your furniture in September 2023. This was
“Standard Deduction Claimed With Qualified Disaster your only casualty loss for the year. Your home is located
Loss.” in a federally declared disaster area designated by FEMA
3. Combine these two amounts and enter on line 16 of in September 2023 for public or individual assistance (or
Schedule A and Form 1040 or 1040-SR, line 12. both). The cost of your home and land was $134,000. The
FMV immediately before the disaster was $147,500 and
The alternative minimum tax adjustment for the the FMV immediately afterward was $100,000. You sepa-
! standard deduction is made retroactively inappli- rately figured the loss on each item of furniture (see Figur-
CAUTION cable to net qualified disaster losses. See Taxpay-
ing the Deduction, earlier) and arrived at a total loss for
ers who also file the 2023 Form 6251, Alternative Mini- furniture of $3,000. Your insurance didn’t cover this type of
mum Tax for Individuals, in the Instructions for Form 4684 casualty loss, and you expect no reimbursement for either
for more information. your home or your furniture.
You elect to amend your 2022 return to claim your
Main home in disaster area. If your home is located in a casualty loss for the disaster. Your AGI on your 2022 re-
federally declared disaster area, you can postpone report- turn was $71,000. Using the rules applicable to disaster
ing the gain if you spend the reimbursement to repair or losses, you figure your casualty loss as follows.
replace your home. Special rules apply to replacement
property related to the damage or destruction of your main House Furnishings
home (or its contents) if located in these areas. For more 1. Cost. . . . . . . . . . . . . . . . . . $134,000 $10,000
information, see Gains Realized on Homes in Disaster
Areas, earlier. 2. FMV before disaster. . . . . . . . $147,500 $8,000
3. FMV after disaster. . . . . . . . . 100,000 5,000
Home made unsafe by disaster. If your home is located 4. Decrease in FMV
in a federally declared disaster area, your state or local (line 2 − line 3). . . . . . . . . . . $47,500 $3,000
government may order you to tear it down or move it be- 5. Smaller of line 1 or line 4. . . . . $47,500 $3,000
6. Subtract estimated
cause it is no longer safe to live in because of the disaster. insurance. . . . . . . . . . . . . . -0- -0-
If this happens, treat the loss in value as a casualty loss 7. Loss after reimbursement. . . . $47,500 $3,000
from a disaster. Your state or local government must issue
the order for you to tear down or move the home within 8. Total loss. . . . . . . . . . . . . . . . . . . . . . . . . $50,500
9. Subtract $100 . . . . . . . . . . . . . . . . . . . . . . 100
120 days after the area is declared a disaster area.
10. Loss after $100 rule. . . . . . . . . . . . . . . . . . $50,400
Figure your loss in the same way as for casualty losses 11. Subtract 10% of $71,000 AGI . . . . . . . . . . . . 7,100
of personal-use property. (See Figuring a Loss, earlier.) In . . . . . . $43,300
12. Amount of casualty loss deduction
determining the decrease in FMV, use the value of your
home before you move it or tear it down as its FMV after
the casualty. How to report the loss on Form 1040-X. You should
adjust your deductions on Form 1040-X. The Instructions
Unsafe home. Your home will be considered unsafe for Form 1040-X show how to do this. Explain the reasons
only if both of the following apply. for your adjustment and attach Form 4684 to show how
• Your home is substantially more dangerous after the you figured your loss. See Figuring a Loss, earlier.
disaster than it was before the disaster. If the damaged or destroyed property was nonbusiness
property and you didn’t itemize your deductions on your
• The danger is from a substantially increased risk of fu- original return, you must first determine whether the casu-
ture destruction from the disaster. alty loss deduction now makes it advantageous for you to
itemize. It is advantageous to itemize if the total of the
Example. Due to a severe storm, the President de-
casualty loss deduction and any other itemized deduc-
clared the county you live in a federal disaster area. Al-
tions is more than your standard deduction. If you itemize,
though your home has only minor damage from the storm,
attach Schedule A (Form 1040) or Schedule A (Form
a month later the county issues a demolition order. This
1040-NR), and Form 4684 to your amended return. Fill out
order is based on a finding that your home is unsafe due
Form 1040-X to refigure your tax to find your refund.
to nearby mud slides caused by the storm. The loss in
your home’s value because the mud slides made it unsafe
is treated as a casualty loss from a disaster. The loss in

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Records. You  should  keep  the  records  that  support          period of time. See Postponement of Gain, earlier, for the 
your loss deduction. You don’t have to attach them to the        rules that apply.
amended return.
                                                                 Qualified  disaster  relief  payments. Qualified  disaster 
If your records were destroyed or lost, you may have to          relief payments aren’t included in the income of individuals 
reconstruct  them.  Information  about  reconstructing  re-      to  the  extent  any  expenses  compensated  by  these  pay-
cords  is  available  at IRS.gov/Newsroom/Reconstructing-        ments aren’t otherwise compensated for by insurance or 
Records-After-a-Natural-Disaster-or-Casualty-Loss or see         other  reimbursement.  These  payments  aren’t  subject  to 
Pub.  3067,  IRS  Disaster  Assistance-Federally  Declared       income  tax,  self-employment  tax,  or  employment  taxes 
Disaster Area.                                                   (social  security,  Medicare,  and  federal  unemployment 
Need a copy of your tax return for the preceding                 taxes). No withholding applies to these payments.
year? It will be easier to prepare Form 1040-X if you have       Qualified  disaster  relief  payments  include  payments 
a copy of your tax return for the preceding year. If you had     you receive (regardless of the source) for the following ex-
your  tax  return  completed  by  a  tax  preparer,  he  or  she penses.
should be able to provide you with a copy of your return. If     • Reasonable and necessary personal, family, living, or 
not, you can get a copy by filing Form 4506 with the IRS.          funeral expenses incurred as a result of a federally de-
There is a fee for each return requested. However, if your         clared disaster.
main home, principal place of business, or tax records are 
located in a federally declared disaster area, this fee will     • Reasonable and necessary expenses incurred for the 
                                                                   repair or rehabilitation of a personal residence due to 
be waived. Write the name of the disaster in the top mar-
                                                                   a federally declared disaster. (A personal residence 
gin of Form 4506 (for example, “Tennessee Severe Thun-
                                                                   can be a rented residence or one you own.)
derstorms and Possible Strong Tornadoes”).
                                                                 • Reasonable and necessary expenses incurred for the 
Other Disaster Issues                                              repair or replacement of the contents of a personal 
                                                                   residence due to a federally declared disaster.
Disaster loss to inventory. If your inventory loss quali-        Qualified disaster relief payments also include amounts 
fies as a casualty loss and is attributable to a federally de-   paid  to  individuals  affected  by  the  disaster  by  a  federal, 
clared disaster in an area designated by FEMA for public         state,  or  local  government  in  connection  with  a  federally 
or individual assistance (or both), you may elect to deduct      declared disaster. These payments must be made from a 
the loss on your return or amended return for the immedi-        governmental  fund,  be  based  on  individual  or  family 
ately preceding year. However, decrease your opening in-         needs, and not be compensation for services. Payments 
ventory for the year of the loss so that the loss won’t be re-   to businesses generally don’t qualify.
ported again in inventories.
                                                                        Qualified disaster relief payments don’t include:
Federal  loan  canceled. If  part  of  your  federal  disaster   !
loan was canceled under the Stafford Act, it is considered       CAUTION
to  be  reimbursement  for  the  loss.  The  cancellation  re-   • Payments for expenses otherwise paid for by insur-
duces your casualty loss deduction.                                ance or other reimbursements; or
Federal disaster relief grants. Don’t include post-disas-        • Income replacement payments, such as payments of 
ter relief grants received under the Stafford Act in your in-      lost wages, lost business income, or unemployment 
come  if  the  grant  payments  are  made  to  help  you  meet     compensation.
necessary expenses or serious needs for medical, dental, 
housing,  personal  property,  transportation,  or  funeral  ex- Qualified disaster mitigation payments.   Qualified dis-
penses.  Don’t  deduct  casualty  losses  or  medical  expen-    aster mitigation payments made under the Stafford Act or 
ses to the extent they are specifically reimbursed by these      the National Flood Insurance Act (as in effect on April 15, 
disaster relief grants. If the casualty loss was specifically    2005) aren’t included in income. These are payments you, 
reimbursed by the grant and you received the grant after         as  a  property  owner,  receive  to  reduce  the  risk  of  future 
the year in which you deducted the casualty loss, see Re-        damage to your property. You can’t increase your basis in 
imbursement Received After Deducting Loss, earlier. Un-          the  property,  or  take  a  deduction  or  credit,  for  expendi-
employment assistance payments under the Stafford Act            tures made with respect to those payments.
are taxable unemployment compensation.
                                                                 Sale  of  property  under  hazard  mitigation  program. 
State  disaster  relief  grants  for  businesses. A  grant       Generally,  if  you  sell  or  otherwise  transfer  property,  you 
that  a  business  receives  under  a  state  program  to  reim- must recognize any gain or loss for tax purposes unless 
burse  businesses  for  losses  incurred  for  damage  or  de-   the property is your main home. You report the gain or de-
struction of property because of a disaster isn’t excludable     duct the loss on your tax return for the year you realize it. 
from income under the general welfare exclusion, as a gift,      (You can’t deduct a loss on personal-use property unless 
as a qualified disaster relief payment (explained next), or      the  loss  resulted  from  a casualty,  as  discussed  earlier.) 
as  a  contribution  to  capital.  However,  the  business  can  However, if you sell or otherwise transfer property to the 
choose to postpone reporting gain realized from the grant        federal  government,  a  state  or  local  government,  or  an 
if it buys qualifying replacement property within a certain 

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Indian tribal government under a hazard mitigation pro- deadline, provided those records are maintained in a
gram, you can choose to postpone reporting the gain if covered disaster area. The main home or principal
you buy qualifying replacement property within a certain place of business doesn’t have to be located in the
period of time. See Postponement of Gain, earlier, for the covered disaster area.
rules that apply.
• Any estate or trust that has tax records necessary to
Gains. Special rules apply if you choose to postpone re- meet a postponed tax deadline, provided those re-
porting gain on property damaged or destroyed in a feder- cords are maintained in a covered disaster area.
ally declared disaster area. For these special rules, see • The spouse on a joint return with a taxpayer who is eli-
the following discussions. gible for postponements.
• Main home in disaster area, earlier, under Replace- • Any individual, business entity, or sole proprietorship
ment Property. not located in a covered disaster area, but whose re-
• Business or income-producing property located in a cords necessary to meet a postponed tax deadline
federally declared disaster area, earlier, under Re- are located in the covered disaster area.
placement Property. • Any individual visiting the covered disaster area who
was killed or injured as a result of the disaster.
Table 3. When To Deduct a Casualty or Theft
• Any other person determined by the IRS to be affected
Loss
by a federally declared disaster.
IF you have a loss...* THEN deduct it in the... Covered disaster area. This is an area of a federally
from a casualty* year the loss occurred. declared disaster in which the IRS has decided to post-
in a federally declared disaster year or the year immediately pone tax deadlines for up to 1 year.
disaster area before the disaster year.
Mandatory 60-day postponement. Certain taxpayers
from a theft year the theft was discovered.
affected by a federally declared disaster that occurs after
on a deposit treated as a year a reasonable estimate can be December 20, 2019, may be eligible for a mandatory
casualty made. 60-day postponement for certain tax deadlines such as fil-
* If you are an individual, casualty and theft losses of personal-use property ing or paying income, excise, and employment taxes; and
are deductible only if the loss is attributable to a federally declared disaster. making contributions to a traditional IRA or Roth IRA.
An exception applies where you have personal casualty gains.
The period beginning on the earliest incident date
specified in the disaster declaration and ending on the
Postponed Tax Deadlines date that is 60 days after either the earliest incident date
or the date of the declaration, whichever is later, is the pe-
The IRS may postpone for up to 1 year certain tax dead- riod during which the deadlines are postponed.
lines of taxpayers who are affected by a federally declared For information about disaster relief available in your
disaster. The tax deadlines the IRS may postpone include area, including postponements, go to IRS News Around
those for filing income, excise, and employment tax re- the Nation.
turns; paying income, excise, and employment taxes; and
making contributions to a traditional IRA or Roth IRA. Abatement of interest and penalties. The IRS may
abate the interest and penalties on underpaid income tax
If any tax deadline is postponed, the IRS will publicize for the length of any postponement of tax deadlines.
the postponement in your area and publish a news re-
lease and, where necessary, in a revenue ruling, revenue
procedure, notice, announcement, or other guidance in Contacting the Federal Emergency
the Internal Revenue Bulletin (IRB). Go to IRS.gov/ Management Agency (FEMA)
DisasterTaxRelief to find out if a tax deadline has been
postponed for your area. You can get information from FEMA by visiting
DisasterAssistance.gov, or calling the following phone
Who is eligible. If the IRS postpones a tax deadline, the numbers. These numbers are only activated after a feder-
following taxpayers are eligible for the postponement. ally declared disaster.
• Any individual whose main home is located in a cov- • 800-621-3362.
ered disaster area (defined later). • Dial 711 and provide the TRS operator the number
• Any business entity or sole proprietor whose principal 800-621-3362 if you are deaf, hard of hearing, or have
place of business is located in a covered disaster a speech disability.
area.
• Any individual who is a relief worker affiliated with a
recognized government or philanthropic organization
and who is assisting in a covered disaster area.
• Any individual, business entity, or sole proprietorship
whose records are needed to meet a postponed tax

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Depreciable property. If the damaged or stolen prop-
erty was depreciable property held more than 1 year, you
How To Report Gains and may have to treat all or part of the gain as ordinary income
to the extent of depreciation allowed or allowable. You fig-
Losses
ure the ordinary income part of the gain in Part III of Form
4797. See Depreciation Recapture in chapter 3 of Pub.
How you report gains and losses depends on whether the
544 for more information about the recapture rule.
property was business, income-producing, or per-
sonal-use property.
Adjustments to Basis
Personal-use property. If you have a loss, use both of
the following. If you have a casualty or theft loss, you must decrease
• Form 4684. your basis in the property by any insurance or other reim-
bursement you receive and by any deductible loss. The
• Schedule A (Form 1040) (or Schedule A (Form result is your adjusted basis in the property.
1040-NR), if you are a nonresident alien).
If you have a gain, report it on both of the following. If you make either of the basis adjustments described
above, amounts you spend on repairs that restore the
• Form 4684. property to its pre-casualty condition increase your adjus-
• Schedule D (Form 1040). ted basis. Don’t increase your basis in the property by any
qualified disaster mitigation payments (discussed earlier
Don’t report on these forms any gain you postpone. If
under Disaster Area Losses ). See Adjusted Basis in Pub.
you choose to postpone gain, see How To Postpone a
551 for more information on adjustments to basis.
Gain, earlier.

Business and income-producing property. Use Form If Deductions Are More Than Income
4684 to report your gains and losses. You will also have to
report the gains and losses on other forms, as explained If your casualty or theft loss deduction causes your deduc-
next. tions for the year to be more than your income for the year,
Property held 1 year or less. Individuals report los- you may have a net operating loss (NOL). You don’t have
ses from income-producing property on Schedule A (Form to be in business to have an NOL from a casualty or theft
1040). Gains from business and income-producing prop- loss. For more information, see Pub. 536, Net Operating
erty are combined with losses from business property and Losses (NOLs) for Individuals, Estates, and Trusts.
the net gain or loss is reported on Form 4797. If you aren’t
otherwise required to file Form 4797, only enter the net
gain or loss on your tax return on the line identified as from How To Get Tax Help
Form 4797 (for individuals filing Form 1040 or 1040-SR,
this would be Schedule 1 (Form 1040), line 4). Next to that If you have questions about a tax issue; need help prepar-
line, enter “Form 4684.” Partnerships and S corporations ing your tax return; or want to download free publications,
should see the Instructions for Form 4684 to find out forms, or instructions, go to IRS.gov to find resources that
where to report these gains and losses. can help you right away.

Property held more than 1 year. If your losses from Preparing and filing your tax return. After receiving all
business and income-producing property are more than your wage and earnings statements (Forms W-2, W-2G,
gains from these types of property, combine your losses 1099-R, 1099-MISC, 1099-NEC, etc.); unemployment
from business property with total gains from business and compensation statements (by mail or in a digital format) or
income-producing property. Report the net gain or loss as other government payment statements (Form 1099-G);
an ordinary gain or loss on Form 4797. If you aren’t other- and interest, dividend, and retirement statements from
wise required to file Form 4797, only enter the net gain or banks and investment firms (Forms 1099), you have sev-
loss on your tax return on the line identified as from Form eral options to choose from to prepare and file your tax re-
4797 (for individuals filing Form 1040 or 1040-SR, this turn. You can prepare the tax return yourself, see if you
would be Schedule 1 (Form 1040), line 4). Next to that qualify for free tax preparation, or hire a tax professional to
line, enter “Form 4684.” Individuals deduct any loss of in- prepare your return.
come-producing property on Schedule A (Form 1040).
Partnerships and S corporations should see Form 4684 to Free options for tax preparation. Your options for pre-
find out where to report these gains and losses. paring and filing your return online or in your local com-
If losses from business and income-producing property munity, if you qualify, include the following.
are less than or equal to gains from these types of prop-
• Free File. This program lets you prepare and file your
erty, report the net amount on Form 4797. You may also
federal individual income tax return for free using soft-
have to report the gain on Schedule D (Form 1040) de-
ware or Free File Fillable Forms. However, state tax
pending on whether you have other transactions. Partner-
preparation may not be available through Free File. Go
ships and S corporations should see Form 4684 to find
to IRS.gov/FreeFile to see if you qualify for free online
out where to report these gains and losses.

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federal tax preparation, e-filing, and direct deposit or • You may also be able to access tax information in your
payment options. e-filing software.
• VITA. The Volunteer Income Tax Assistance (VITA)
program offers free tax help to people with Need someone to prepare your tax return? There are
low-to-moderate incomes, persons with disabilities, various types of tax return preparers, including enrolled
and limited-English-speaking taxpayers who need agents, certified public accountants (CPAs), accountants,
help preparing their own tax returns. Go to IRS.gov/ and many others who don’t have professional credentials.
VITA, download the free IRS2Go app, or call If you choose to have someone prepare your tax return,
800-906-9887 for information on free tax return prepa- choose that preparer wisely. A paid tax preparer is:
ration.
• Primarily responsible for the overall substantive accu-
• TCE. The Tax Counseling for the Elderly (TCE) pro- racy of your return,
gram offers free tax help for all taxpayers, particularly
those who are 60 years of age and older. TCE volun- • Required to sign the return, and
teers specialize in answering questions about pen- • Required to include their preparer tax identification
sions and retirement-related issues unique to seniors. number (PTIN).
Go to IRS.gov/TCE or download the free IRS2Go app
Although the tax preparer always signs the return,
for information on free tax return preparation.
you're ultimately responsible for providing all the
• MilTax. Members of the U.S. Armed Forces and quali- CAUTION! information required for the preparer to accurately
fied veterans may use MilTax, a free tax service of- prepare your return and for the accuracy of every item re-
fered by the Department of Defense through Military ported on the return. Anyone paid to prepare tax returns
OneSource. For more information, go to for others should have a thorough understanding of tax
MilitaryOneSource MilitaryOneSource.mil/MilTax ( ). matters. For more information on how to choose a tax pre-
Also, the IRS offers Free Fillable Forms, which can parer, go to Tips for Choosing a Tax Preparer on IRS.gov.
be completed online and then e-filed regardless of in-
come.
Employers can register to use Business Services On-
Using online tools to help prepare your return. Go to line. The Social Security Administration (SSA) offers on-
IRS.gov/Tools for the following. line service at SSA.gov/employer for fast, free, and secure
• The Earned Income Tax Credit Assistant IRS.gov/ ( W-2 filing options to CPAs, accountants, enrolled agents,
EITCAssistant) determines if you’re eligible for the and individuals who process Form W-2, Wage and Tax
earned income credit (EIC). Statement, and Form W-2c, Corrected Wage and Tax
Statement.
• The Online EIN Application IRS.gov/EIN ( ) helps you
get an employer identification number (EIN) at no IRS social media. Go to IRS.gov/SocialMedia to see the
cost. various social media tools the IRS uses to share the latest
• The Tax Withholding Estimator IRS.gov/W4App ( ) information on tax changes, scam alerts, initiatives, prod-
makes it easier for you to estimate the federal income ucts, and services. At the IRS, privacy and security are our
tax you want your employer to withhold from your pay- highest priority. We use these tools to share public infor-
check. This is tax withholding. See how your withhold- mation with you. Don’t post your social security number
ing affects your refund, take-home pay, or tax due. (SSN) or other confidential information on social media
sites. Always protect your identity when using any social
• The First-Time Homebuyer Credit Account Look-up networking site.
(IRS.gov/HomeBuyer) tool provides information on The following IRS YouTube channels provide short, in-
your repayments and account balance. formative videos on various tax-related topics in English,
• The Sales Tax Deduction Calculator IRS.gov/ ( Spanish, and ASL.
SalesTax) figures the amount you can claim if you
• Youtube.com/irsvideos.
itemize deductions on Schedule A (Form 1040).
• Youtube.com/irsvideosmultilingua.
Getting answers to your tax questions. On
IRS.gov, you can get up-to-date information on • Youtube.com/irsvideosASL.
current events and changes in tax law.
Watching IRS videos. The IRS Video portal
• IRS.gov/Help: A variety of tools to help you get an- (IRSVideos.gov) contains video and audio presentations
swers to some of the most common tax questions. for individuals, small businesses, and tax professionals.
• IRS.gov/ITA: The Interactive Tax Assistant, a tool that
will ask you questions and, based on your input, pro- Online tax information in other languages. You can
vide answers on a number of tax topics. find information on IRS.gov/MyLanguage if English isn’t
your native language.
• IRS.gov/Forms: Find forms, instructions, and publica-
tions. You will find details on the most recent tax Free Over-the-Phone Interpreter (OPI) Service. The
changes and interactive links to help you find answers IRS is committed to serving taxpayers with limited-English
to your questions. proficiency (LEP) by offering OPI services. The OPI

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Service is a federally funded program and is available at • View your address on file or manage your communica-
Taxpayer Assistance Centers (TACs), most IRS offices, tion preferences.
and every VITA/TCE tax return site. The OPI Service is ac-
cessible in more than 350 languages. Get a transcript of your return. With an online ac-
count, you can access a variety of information to help you
Accessibility Helpline available for taxpayers with during the filing season. You can get a transcript, review
disabilities. Taxpayers who need information about ac- your most recently filed tax return, and get your adjusted
cessibility services can call 833-690-0598. The Accessi- gross income. Create or access your online account at
bility Helpline can answer questions related to current and IRS.gov/Account.
future accessibility products and services available in al-
ternative media formats (for example, braille, large print, Tax Pro Account. This tool lets your tax professional
audio, etc.). The Accessibility Helpline does not have ac- submit an authorization request to access your individual
cess to your IRS account. For help with tax law, refunds, or taxpayer IRS online account. For more information, go to
account-related issues, go to IRS.gov/LetUsHelp. IRS.gov/TaxProAccount.

Note. Form 9000, Alternative Media Preference, or Using direct deposit. The safest and easiest way to re-
Form 9000(SP) allows you to elect to receive certain types ceive a tax refund is to e-file and choose direct deposit,
of written correspondence in the following formats. which securely and electronically transfers your refund di-
rectly into your financial account. Direct deposit also
• Standard Print. avoids the possibility that your check could be lost, stolen,
• Large Print. destroyed, or returned undeliverable to the IRS. Eight in
10 taxpayers use direct deposit to receive their refunds. If
• Braille.
you don’t have a bank account, go to IRS.gov/
• Audio (MP3). DirectDeposit for more information on where to find a bank
• Plain Text File (TXT). or credit union that can open an account online.

• Braille Ready File (BRF). Reporting and resolving your tax-related identity
theft issues.
Disasters. Go to IRS.gov/DisasterRelief to review the
available disaster tax relief. • Tax-related identity theft happens when someone
steals your personal information to commit tax fraud.
Getting tax forms and publications. Go to IRS.gov/ Your taxes can be affected if your SSN is used to file a
Forms to view, download, or print all the forms, instruc- fraudulent return or to claim a refund or credit.
tions, and publications you may need. Or, you can go to • The IRS doesn’t initiate contact with taxpayers by
IRS.gov/OrderForms to place an order. email, text messages (including shortened links), tele-
phone calls, or social media channels to request or
Getting tax publications and instructions in eBook
verify personal or financial information. This includes
format. Download and view most tax publications and
requests for personal identification numbers (PINs),
instructions (including the Instructions for Form 1040) on
passwords, or similar information for credit cards,
mobile devices as eBooks at IRS.gov/eBooks.
banks, or other financial accounts.
IRS eBooks have been tested using Apple's iBooks for
iPad. Our eBooks haven’t been tested on other dedicated • Go to IRS.gov/IdentityTheft, the IRS Identity Theft
eBook readers, and eBook functionality may not operate Central webpage, for information on identity theft and
as intended. data security protection for taxpayers, tax professio-
nals, and businesses. If your SSN has been lost or
Access your online account (individual taxpayers stolen or you suspect you’re a victim of tax-related
only). Go to IRS.gov/Account to securely access infor- identity theft, you can learn what steps you should
mation about your federal tax account. take.
• View the amount you owe and a breakdown by tax • Get an Identity Protection PIN (IP PIN). IP PINs are
year. six-digit numbers assigned to taxpayers to help pre-
• See payment plan details or apply for a new payment vent the misuse of their SSNs on fraudulent federal in-
plan. come tax returns. When you have an IP PIN, it pre-
vents someone else from filing a tax return with your
• Make a payment or view 5 years of payment history SSN. To learn more, go to IRS.gov/IPPIN.
and any pending or scheduled payments.
• Access your tax records, including key data from your Ways to check on the status of your refund.
most recent tax return, and transcripts. • Go to IRS.gov/Refunds.
• View digital copies of select notices from the IRS. • Download the official IRS2Go app to your mobile de-
• Approve or reject authorization requests from tax pro- vice to check your refund status.
fessionals. • Call the automated refund hotline at 800-829-1954.

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The IRS can’t issue refunds before mid-February Understanding an IRS notice or letter you’ve re-
! for returns that claimed the EIC or the additional ceived. Go to IRS.gov/Notices to find additional informa-
CAUTION child tax credit (ACTC). This applies to the entire tion about responding to an IRS notice or letter.
refund, not just the portion associated with these credits.
Responding to an IRS notice or letter. You can now
upload responses to all notices and letters using the
Making a tax payment. Payments of U.S. tax must be
Document Upload Tool. For notices that require additional
remitted to the IRS in U.S. dollars. Digital assets are not
action, taxpayers will be redirected appropriately on
accepted. Go to IRS.gov/Payments for information on how
IRS.gov to take further action. To learn more about the
to make a payment using any of the following options.
tool, go to IRS.gov/Upload.
• IRS Direct Pay: Pay your individual tax bill or estimated
tax payment directly from your checking or savings ac- Note. You can use Schedule LEP (Form 1040), Re-
count at no cost to you. quest for Change in Language Preference, to state a pref-
erence to receive notices, letters, or other written commu-
• Debit Card, Credit Card, or Digital Wallet: Choose an
nications from the IRS in an alternative language. You may
approved payment processor to pay online or by
not immediately receive written communications in the re-
phone.
quested language. The IRS’s commitment to LEP taxpay-
• Electronic Funds Withdrawal: Schedule a payment ers is part of a multi-year timeline that began providing
when filing your federal taxes using tax return prepara- translations in 2023. You will continue to receive communi-
tion software or through a tax professional. cations, including notices and letters, in English until they
• Electronic Federal Tax Payment System: Best option are translated to your preferred language.

for businesses. Enrollment is required. Contacting your local TAC. Keep in mind, many ques-
• Check or Money Order: Mail your payment to the ad- tions can be answered on IRS.gov without visiting a TAC.
dress listed on the notice or instructions. Go to IRS.gov/LetUsHelp for the topics people ask about
most. If you still need help, TACs provide tax help when a
• Cash: You may be able to pay your taxes with cash at
tax issue can’t be handled online or by phone. All TACs
a participating retail store.
now provide service by appointment, so you’ll know in ad-
• Same-Day Wire: You may be able to do same-day vance that you can get the service you need without long
wire from your financial institution. Contact your finan- wait times. Before you visit, go to IRS.gov/TACLocator to
cial institution for availability, cost, and time frames. find the nearest TAC and to check hours, available serv-
ices, and appointment options. Or, on the IRS2Go app,
Note. The IRS uses the latest encryption technology under the Stay Connected tab, choose the Contact Us op-
to ensure that the electronic payments you make online, tion and click on “Local Offices.”
by phone, or from a mobile device using the IRS2Go app
are safe and secure. Paying electronically is quick, easy,
and faster than mailing in a check or money order. The Taxpayer Advocate Service (TAS)
Is Here To Help You
What if I can’t pay now? Go to IRS.gov/Payments for
more information about your options. What Is TAS?

• Apply for an online payment agreement IRS.gov/ ( TAS is an independent organization within the IRS that
OPA) to meet your tax obligation in monthly install- helps taxpayers and protects taxpayer rights. TAS strives
ments if you can’t pay your taxes in full today. Once to ensure that every taxpayer is treated fairly and that you
you complete the online process, you will receive im- know and understand your rights under the Taxpayer Bill
mediate notification of whether your agreement has of Rights.
been approved.
• Use the Offer in Compromise Pre-Qualifier to see if How Can You Learn About Your Taxpayer
you can settle your tax debt for less than the full Rights?
amount you owe. For more information on the Offer in
Compromise program, go to IRS.gov/OIC. The Taxpayer Bill of Rights describes 10 basic rights that
all taxpayers have when dealing with the IRS. Go to
Filing an amended return. Go to IRS.gov/Form1040X
TaxpayerAdvocate.IRS.gov to help you understand what
for information and updates.
these rights mean to you and how they apply. These are
Checking the status of your amended return. Go to your rights. Know them. Use them.
IRS.gov/WMAR to track the status of Form 1040-X amen-
ded returns. What Can TAS Do for You?
It can take up to 3 weeks from the date you filed
TAS can help you resolve problems that you can’t resolve
! your amended return for it to show up in our sys- with the IRS. And their service is free. If you qualify for
CAUTION tem, and processing it can take up to 16 weeks.
their assistance, you will be assigned to one advocate
who will work with you throughout the process and will do

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everything  possible  to  resolve  your  issue.  TAS  can  help      • Call TAS toll free at 877-777-4778.
you if:
 • Your problem is causing financial difficulty for you,            How Else Does TAS Help Taxpayers?
   your family, or your business;
                                                                    TAS  works  to  resolve  large-scale  problems  that  affect 
 • You face (or your business is facing) an immediate               many taxpayers. If you know of one of these broad issues, 
   threat of adverse action; or                                     report it to TAS at IRS.gov/SAMS. Be sure to not include 
 • You’ve tried repeatedly to contact the IRS but no one            any personal taxpayer information.
   has responded, or the IRS hasn’t responded by the 
   date promised.                                                   Low Income Taxpayer Clinics (LITCs)

How Can You Reach TAS?                                              LITCs are independent from the IRS and TAS. LITCs rep-
                                                                    resent individuals whose income is below a certain level 
TAS  has  offices in  every  state,  the  District  of  Columbia,   and who need to resolve tax problems with the IRS. LITCs 
and Puerto Rico. To find your advocate’s number:                    can represent taxpayers in audits, appeals, and tax collec-
                                                                    tion  disputes  before  the  IRS  and  in  court.  In  addition, 
 • Go to TaxpayerAdvocate.IRS.gov/Contact-Us;                       LITCs can provide information about taxpayer rights and 
 • Download Pub. 1546, The Taxpayer Advocate Service                responsibilities  in  different  languages  for  individuals  who 
   Is Your Voice at the IRS, available at IRS.gov/pub/irs-          speak English as a second language. Services are offered 
   pdf/p1546.pdf;                                                   for free or a small fee. For more information or to find an 
                                                                    LITC  near     you,  go   to       the   LITC        page at 
 • Call the IRS toll free at 800-TAX-FORM 
                                                                    TaxpayerAdvocate.IRS.gov/LITC  or  see  IRS  Pub.  4134, 
   (800-829-3676) to order a copy of Pub. 1546;
                                                                    Low  Income  Taxpayer  Clinic  List,  at IRS.gov/pub/irs-pdf/
 • Check your local directory; or                                   p4134.pdf.

                  To help us develop a more useful index, please let us know if you have ideas for index entries.
Index             See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.
 
                                          Proof of 7                                     Home made unsafe      24
A                                         When to report          22                     How to deduct loss in preceding 
Abatement of interest and                 Workbooks for listing property      2          year 23
 penalties  26                            Clean up costs    9                            Inventory 25
Accidents  4                              Condemnation      2                            Main home rules     20 26, 
Adjusted basis    11                      Corrosive drywall       5                      Qualified disaster mitigation 
Adjustments to basis   20 27,             Costs:                                         payments      25
Amended returns   22                      Appraisals     11                              Qualified disaster relief 
Appraisals  8 11,                         Clean up  9                                    payments      25
Assistance (See Tax help)                 Incidental expenses        10                  Records to keep     25
                                          Landscaping      9                             Tax deadlines postponed         26
B                                         Photographs taken after loss       11          When to deduct      23
Bad debts  7                              Protection     10                              Table 3   26
Basis:                                    Repair 9                                      Disaster loss  3
 Adjusted  11                             Replacement      11                           Disaster mitigation payments       25
 Adjustments to   20 27,                                                                Disaster relief grants 12
 Replacement property    20               D                                             Drywall, corrosive   5
                                                                                        Due dates:
Business or income-producing              Death of taxpayer:
                                                                                         Tax deadlines postponed         26
 property   8                             Postponement of gain         19
Business purposes, property used          Deductible losses       4                     E
 partly for 17                            Deduction limits        14
                                          $100 rule 14                                  Employer’s emergency disaster 
C                                                                                        fund 11
                                          10% rule 15
Cars:                                     Personal-use property (Table 2)      13       F
 Accidents  4                             Deposit losses    6 26, 
                                                                                        Fair market value (FMV):
 Fair market value of  9                  Reporting of (Table 1)       7
                                                                                         Decline in value of property in or 
Cash gifts 12                             When to report          22                     near casualty area    11
Casualty losses   26                      Disaster area losses       22                  Measuring decrease in     8
 Deductible losses   4                    Federal loan canceled        25                Items not to consider      10
 Definition 3                             Federally declared disaster       19 22,       Items to consider     8
 Deposits, loss on   7                    Figuring loss deduction        24             Federal casualty loss  3
 Nondeductible losses    4                Form 1040-X      24                           Federal disaster relief grants     25
 Progressive deterioration 5

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Federal Emergency Management           Married taxpayers:                    Replacement period   20
  Agency (FEMA), contacting     26       Deduction limits 15                  Extension of 20
Federally declared disaster:           Mislaid or lost property  6           Replacement property   19
  Disaster loss 3                      Missing children, photographs of    2  Advance payment   19
  Federal casualty loss 3                                                     Basis adjustment to corporation’s 
  Qualified disaster loss 4            N                                      property    20
Federally declared disasters   3 19, , Nonbusiness bad debts        7         Basis of 20
  22                                   Nondeductible losses      4            Main home   20
Figuring gain  18                                                             In disaster area  24
Figuring loss 7 16,                    P                                      Postponement of gain  21
  Adjusted basis  11                   Payments for living expenses     12   Reporting gains and losses                  18 27, 
  Disaster area losses 24              Penalty abatement   26                 Basis, adjustments to 27
  Insurance and other                  Personal property:                     Business and income-producing 
   reimbursements    11                                                       property    27
                                         Loss deduction, figuring of  16
Form 1040-X:                                                                  Deductions exceeding income                  27
                                       Personal-use property:
  Disaster area losses 24                                                     Deposits  7
                                         Deduction limits (Table 2)   13
Form 1040, Schedule A     27                                                  Table 1   7
                                         Reporting gains and losses   27
Form 1040, Schedule D     27                                                  Disaster area losses 24
                                       Personal-use real property     8
Form 4684:                                                                    Personal-use property 27
                                       Photographs:
  Reporting gains and losses on                                               Timing of 22
   personal-use property    27           Documentation of loss   11
                                       Ponzi-type investment schemes    6
                                                                             S
G                                      Postponed tax deadlines      26
                                       Postponement of gain      18 21,      Sentimental value  11
Gains:                                                                       State disaster relief grants for 
                                         Amended return   22
  Figuring 18                                                                 businesses   25
                                         Changing mind    22
  Postponement of   18 21,                                                   Stolen property (See Theft losses)
                                         Replacement property acquired 
  Reimbursements    8
                                         after return filed 21
  Reporting of 26                                                            T
                                         Replacement property acquired 
  When to report  22                     before return filed     21          Tables and figures:
                                         Required statement  21               Deduction limit rules for 
I                                                                             personal-use property 
                                         Substituting replacement 
Incidental expenses  10                  property    21                       (Table 2)   13
Insurance  11                            Three-year limit 22                  Reporting loss on deposits 
  Living expenses, payments for 12     Proof of loss 7                        (Table 1)   7
Interest abatement   26                Protection costs   10                  When to deduct losses (Table 3)               26
Inventory losses  8                    Publications (See Tax help)           Tax help 27
  Disaster area losses 25                                                    Theft losses 6
                                       Q                                      FMV of stolen property   8
                                                                              Mislaid or lost property 6
L                                      Qualified disaster loss   4
                                                                              Proof of 7
Landscaping   9                        Qualified opportunity funds    2
Leased property   8                                                           When to deduct (Table 3)                   26
  When to report  22                   R                                      When to report  22
                                                                              Workbooks for listing property               2
Losses:                                Records of loss   7
                                                                             Timber loss 19
  Casualty (See Casualty losses)       Recovered stolen property      8
  Deposits (See Deposit losses)        Reimbursements:                       W
  Disaster areas (See Disaster area      Cash gifts 12
                                                                             Workbooks for property lost due to 
   losses)                               Disaster relief 12
                                                                              casualties and thefts    2
  Figuring amount (See Figuring loss)    Employer’s emergency disaster 
  Proof of 7                             fund 11
  Records of 7                           Failure to file a claim 11
  Reporting of 26                        Received after deducting loss  13
  Theft (See Theft losses)               Types of 11
  When to report  22                   Related expenses    10
   Table 3   26                        Related person, replacement 
                                         property bought from       19
M                                      Repair costs  9
Mandatory 60-day                       Replacement cost    11
  postponement    26

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