Instructions For Form 4684 - Casualties And Thefts

2012

Department of the Treasury

Internal Revenue Service

Instructions for Form 4684

Casualties and Thefts

Section references are to the Internal Revenue Code

property is the same as your basis in the old

If the replacement property or stock is

unless otherwise noted.

property.

acquired from a related person, gain

generally cannot be postponed by:

General Instructions

Any tangible replacement property held

Corporations (other than S corporations),

for use in a trade or business is treated as

Partnerships more than 50% owned by

similar or related in service or use to property

one or more corporations (other than S

Future Developments

held for use in a trade or business or for

corporations), or

investment if:

For the latest information about

All other taxpayers, unless the aggregate

The property you are replacing was

developments related to Form 4684 and its

realized gains on the involuntarily converted

damaged or destroyed in a disaster, and

instructions, such as legislation enacted after

property are $100,000 or less for the tax

The area in which the property was

they were published, go to

year. This rule applies to partnerships and S

damaged or destroyed was declared by the

form4684.

corporations at both the entity and partner or

President of the United States to warrant

shareholder level.

Purpose of Form

federal assistance because of that disaster.

For details, see section 1033(i).

Use Form 4684 to report gains and losses

Generally, you must recognize the gain if

from casualties and thefts. Attach Form 4684

For details on how to postpone the gain,

you receive unlike property or money as

to your tax return.

see Pub. 547, Casualties, Disasters, and

reimbursement. But you generally can

Thefts.

choose to postpone all or part of the gain if,

Losses You Can Deduct

within 2 years of the end of the first tax year

If your main home was located in a

in which any part of the gain is realized, you

You can deduct losses of property from fire,

disaster area and that home or any of its

purchase:

storm, shipwreck, or other casualty, or theft

contents were damaged or destroyed due to

Property similar or related in service or

(for example, larceny, embezzlement, and

the disaster, special rules apply. See

Gains

use to the damaged, destroyed, or stolen

robbery).

Realized on Homes in Disaster Areas

later.

property, or

If your property is covered by insurance,

A controlling interest (at least 80%) in a

When To Deduct a Loss

you must file a timely insurance claim for

corporation owning such property.

reimbursement of your loss. Otherwise, you

Deduct the part of your casualty or theft loss

cannot deduct the loss as a casualty or theft

The replacement period is 5 years,

that is not reimbursable in the tax year the

loss. However, the part of the loss that is not

instead of 2 years, if the property was

casualty occurred or the theft was

covered by insurance is still deductible.

located in the:

discovered. However, a disaster loss and a

Hurricane Katrina disaster area (which

loss from deposits in insolvent or bankrupt

Related expenses. The related expenses

includes the states of Alabama, Florida,

financial institutions may be treated

you have due to a casualty or theft, such as

Louisiana, and Mississippi) and that property

differently. See

Disaster Losses

and

Special

expenses for the treatment of personal

was converted after August 24, 2005, as a

Treatment for Losses on Deposits in

injuries or for the rental of a car, are not

result of Hurricane Katrina, but only if

Insolvent or Bankrupt Financial Institutions

deductible as casualty or theft losses.

substantially all of the use of the replacement

later.

Costs for protection against future

property is in that disaster area.

casualties are not deductible but should be

If you are not sure whether part of your

Kansas disaster area (as defined in Pub.

capitalized as permanent improvements. An

casualty or theft loss will be reimbursed, do

4492-A, Information for Taxpayers Affected

example would be the cost of a levee to stop

not deduct that part until the tax year when

by the May 4, 2007, Kansas Storms and

flooding.

you become reasonably certain that it will not

Tornadoes) and that property was converted

be reimbursed.

after May 3, 2007, as a result of the storms

Losses You Cannot

or tornadoes, but only if substantially all of

If you are reimbursed for a loss you

Deduct

the use of the replacement property is in that

deducted in an earlier year, include the

disaster area.

Money or property misplaced or lost.

reimbursement in your income in the year

Midwestern disaster areas (as defined in

you received it, but only to the extent the

Breakage of china, glassware, furniture,

Pub. 4492-B, Information for Affected

deduction reduced your tax in an earlier

and similar items under normal conditions.

Taxpayers in the Midwestern Disaster Areas)

year.

Progressive damage to property

and that property was converted on or after

(buildings, clothes, trees, etc.) caused by

the applicable disaster date as a result of

See Pub. 547 for special rules on when to

termites, moths, other insects, or disease.

severe storms, tornadoes, or flooding, but

deduct losses from casualties and thefts to

only if substantially all of the use of the

Gain on Reimbursement

leased property.

replacement property is in those disaster

areas.

Disaster Losses

If the amount you receive in insurance or

other reimbursement is more than the cost or

To postpone all of the gain, the cost of the

A disaster loss is a loss that occurred in an

other basis of the property, you have a gain.

replacement property must be equal to or

area determined by the President of the

If you have a gain, you may have to pay tax

more than the reimbursement you received

United States to warrant federal disaster

on it, or you may be able to postpone the

for your property. If the cost of the

assistance. It includes a major disaster or

gain.

replacement property is less than the

emergency declaration. A list of areas

Do not report the gain on damaged,

reimbursement received, you must recognize

warranting public or individual assistance (or

destroyed, or stolen property if you receive

the gain to the extent the reimbursement

both) is available at the Federal Emergency

property that is similar or related to it in

exceeds the cost of the replacement

Management Agency (FEMA) website at

service or use. Your basis in the new

property.

Oct 03, 2012

Cat. No. 12998Z

Instructions For Form 4684 - Casualties And Thefts - 2012

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