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Department of the Treasury
Internal Revenue Service
Instructions for Form 4684
Casualties and Thefts
Section references are to the Internal Revenue Code.
basis in the new property is the same
If your main home was located in a
General Instructions
as your basis in the old property.
Presidentially declared disaster area,
and that home or any of its contents
Any tangible replacement property
were damaged or destroyed due to the
Purpose of Form
held for use in a trade or business is
disaster, special rules apply. See Gains
treated as similar or related in service
Use Form 4684 to report gains and
Realized on Homes in Disaster Areas
or use to property held for use in a
losses from casualties and thefts.
on page 2.
trade or business or for investment if:
Attach Form 4684 to your tax return.
•
The property you are replacing was
When To Deduct a Loss
damaged or destroyed in a disaster and
Losses You May Deduct
•
Deduct the part of your casualty or theft
The area in which the property was
You may deduct losses from fire, storm,
loss that is not reimbursable in the tax
damaged or destroyed was declared by
shipwreck, or other casualty, or theft
year the casualty occurred or the theft
the President of the United States to
(for example, larceny, embezzlement,
was discovered. However, a disaster
warrant Federal assistance because of
and robbery).
loss and a loss from deposits in
that disaster.
insolvent or bankrupt financial
If your property is covered by
Generally, you must recognize the
institutions may be treated differently.
insurance, you must file a timely
gain if you receive unlike property or
See Disaster Losses below and
insurance claim for reimbursement of
money as reimbursement. But you
Special Treatment for Losses on
your loss. Otherwise, you cannot
generally can choose to postpone all or
Deposits in Insolvent or Bankrupt
deduct the loss as a casualty or theft
part of the gain if, within 2 years of the
Financial Institutions on
loss. However, the part of the loss that
end of the first tax year in which any
page 2.
is not covered by insurance is still
part of the gain is realized, you
deductible.
purchase:
If you are not sure whether part of
•
Property similar or related in service
your casualty or theft loss will be
Related expenses. The related
or use to the damaged, destroyed, or
expenses you have due to a casualty or
reimbursed, do not deduct that part
stolen property or
until the tax year when you become
theft, such as expenses for the
•
A controlling interest (at least 80%) in
treatment of personal injuries or for the
reasonably certain that it will not be
a corporation owning such property.
reimbursed.
rental of a car, are not deductible as
To postpone all of the gain, the cost
casualty or theft losses.
If you are reimbursed for a loss you
of the replacement property must be
Costs for protection against future
deducted in an earlier year, include the
equal to or more than the
casualties are not deductible but should
reimbursement in your income in the
reimbursement you received for your
be capitalized as permanent
year you received it, but only to the
property. If the cost of the replacement
improvements. An example would be
extent the deduction reduced your tax
property is less than the reimbursement
the cost of a levee to stop flooding.
in an earlier year.
received, you must recognize the gain
to the extent the reimbursement
See Pub. 547 for special rules on
Losses You May Not
exceeds the cost of the replacement
when to deduct losses from casualties
property.
Deduct
and thefts to leased property.
•
Money or property misplaced or lost.
If the replacement property or stock
Disaster Losses
•
Breakage of china, glassware,
is acquired from a related person, gain
A disaster loss is a loss that occurred in
furniture, and similar items under
generally cannot be postponed by:
•
an area determined by the President of
normal conditions.
Corporations (other than S
•
the United States to warrant Federal
Progressive damage to property
corporations);
•
disaster assistance.
(buildings, clothes, trees, etc.) caused
Partnerships more than 50% owned
by termites, moths, other insects, or
by one or more corporations (other than
You may elect to deduct a disaster
disease.
S corporations); or
loss in the tax year immediately prior to
•
All other taxpayers, unless the
the tax year in which the disaster
Gain on Reimbursement
aggregate realized gains on the
occurred as long as the loss would
involuntarily converted property are
otherwise be allowed as a deduction in
If the amount you receive in insurance
$100,000 or less for the tax year. (This
the tax year it occurred.
or other reimbursement is more than
rule applies to partnerships and S
the cost or other basis of the property,
This election must be made by filing
corporations at both the entity and
you have a gain. If you have a gain,
your return or amended return for the
partner or shareholder level.)
you may have to pay tax on it, or you
prior year, and claiming your disaster
For details, see section 1033(i).
may be able to postpone the gain.
loss on it, by the later of:
•
For details on how to postpone the
Do not report the gain on damaged,
The due date for filing your original
destroyed, or stolen property if you
gain, see Pub. 547, Casualties,
return (without extensions) for the tax
Disasters, and Thefts (Business and
receive property that is similar or
year in which the disaster actually
related to it in service or use. Your
Nonbusiness).
occurred or
Cat. No. 12998Z