Instructions For Form 4684 - Casualties And Thefts

Losses From Ponzi-Type

more than four items were lost or damaged,

Part of a federal disaster loan is forgiven,

use additional sheets following the format of

the part you do not have to pay back is

Investment Schemes

lines 1 through 9.

considered a reimbursement.

The IRS has issued the following guidance to

The person who leases your property

Use a separate Form 4684 through

assist taxpayers who are victims of losses

must make repairs or must repay you for any

line 12 for each casualty or theft involving

from Ponzi-type investment schemes.

part of a loss, the repayment and the cost of

property not used in a trade or business or

Revenue Ruling 2009-9, 2009-14 I.R.B.

the repairs are considered reimbursements.

for income-producing purposes.

735 (available at

A court awards you damages for a

2009-14_IRB/ar07.html).

casualty or theft loss, the amount you are

Do not include any loss previously

Revenue Procedure 2009-20, 2009-14

able to collect, minus lawyers' fees and other

deducted on an estate tax return.

I.R.B. 749 (available at

necessary expenses, is a reimbursement.

2009-14_IRB/ar11.html).

You accept repairs, restoration, or cleanup

If you are liable for casualty or theft losses

Revenue Procedure 2011-58, 2011-50

services provided by relief agencies, it is

to property you lease from someone else,

I.R.B. 849 (available at

considered a reimbursement.

see Pub. 547.

2011-50_IRB/ar11.html).

A bonding company pays you for a theft

These losses are deductible as theft losses

loss, the payment is also considered a

Line 1

of income-producing property on your tax

reimbursement.

return for the year the loss was discovered.

Describe the type of property (for example,

Lump-sum reimbursement. If you have a

You figure the deductible loss in Section B of

furniture, jewelry, car, etc.).

casualty or theft loss of several assets at the

Form 4684. If you qualify to use Revenue

same time and you receive a lump-sum

Procedure 2009-20 and choose to follow the

reimbursement, you must divide the amount

If you claim a

disaster loss

(defined

procedures in the guidance, you also must

you receive among the assets according to

earlier), specify the date(s) of the disaster

complete Appendix A of that procedure and

the fair market value of each asset at the

and the city, town, county or parish, and

write "Revenue Procedure 2009-20" across

time of the loss.

state in which the damaged or destroyed

the top of Form 4684. For more information,

property was located. Include this

see the above revenue ruling and revenue

Grants, gifts, and other payments.

information on line 1 or on an attached

procedure.

Grants and other payments you receive to

statement.

help you after a casualty are considered

Damage From Corrosive

reimbursements only if they must be used

Line 2

Drywall

specifically to repair or replace your property.

Such payments will reduce your casualty

Cost or other basis usually means original

Under a special procedure, you may be able

loss deduction. If there are no conditions on

cost plus improvements. Subtract any

to claim a casualty loss deduction for

how you have to use the money you receive,

postponed gain from the sale of a previous

amounts you paid to repair damage to your

it is not a reimbursement.

main home. Special rules apply to property

home and household appliances that

received as a gift or inheritance. See Pub.

Use and occupancy insurance. If

resulted from corrosive drywall. For details,

551, Basis of Assets, for details. If you

insurance reimburses you for your loss of

see Pub. 547.

inherited the property from someone who

business income, it does not reduce your

died in 2010 and the executor of the

casualty or theft loss. The reimbursement is

Specific Instructions

decedent's estate made the election to file

income, and is taxed in the same manner as

Form 8939, Allocation of Increase in Basis

your business income.

for Property Received From a Decedent,

Which Sections To

Main home destroyed. If you have a gain

refer to the information provided by the

because your main home was destroyed,

Complete

executor or see Pub. 4895, Tax Treatment of

you generally can exclude the gain from your

Property Acquired From a Decedent Dying in

Use Section A to figure casualty or theft

income as if you had sold or exchanged your

2010.

gains and losses for property that is not used

home. You may be able to exclude up to

in a trade or business or for

$250,000 of the gain (up to $500,000 if

Line 3

income-producing purposes.

married filing jointly). To exclude a gain, you

generally must have owned and lived in the

Enter on this line the amount of insurance or

Casualty or theft losses of personal use

property as your main home for at least 2

other reimbursement you received or expect

property are deductible only to the extent

years during the 5-year period ending on the

to receive for each property. Include your

that the amount of the loss from each

date it was destroyed. For information on this

insurance coverage whether or not you are

separate casualty or theft is more than $100

exclusion, see Pub. 523.

filing a claim for reimbursement. For

and the total amount of all losses (as so

If you exclude the gain and the entire gain

example, your car worth $2,000 is totally

reduced) during the year is more than 10% of

is excludable, do not report the casualty on

destroyed in a collision. You are insured with

your AGI (Form 1040, line 38, or Form

Form 4684. If the gain is more than you can

a $500 deductible, but decide not to report it

1040NR, line 37).

exclude, reduce the insurance or other

to your insurance company because you are

reimbursement by the amount of the

Use Section B to figure casualty or theft

afraid the insurance company will cancel

exclusion and enter the result on line 3.

gains and losses for property that is used in

your policy. In this case, enter $1,500 on this

Attach a statement showing the full amount

a trade or business or for income-producing

line.

purposes.

of insurance or other reimbursement and the

amount of the exclusion. You may be able to

If you expect to be reimbursed but have

If property is used partly in a trade or

postpone reporting the excess gain if you

not yet received payment, you must still

business and partly for personal purposes,

buy replacement property. See

Gain on

enter the expected reimbursement from the

such as a personal home with a rental unit,

Reimbursement

and

Gains Realized on

loss. If, in a later tax year, you determine with

figure the personal part in Section A and the

Homes in Disaster Areas,

earlier.

reasonable certainty that you will not be

business part in Section B.

reimbursed for all or part of the loss, you can

Section A—Personal Use

Line 4

deduct for that year the amount of the loss

that is not reimbursed.

Property

If you are entitled to an insurance payment or

Types of reimbursements. Insurance is

other reimbursement for any part of a

Use a separate column for lines 2 through 9

the most common way to be reimbursed for

casualty or theft loss but you choose not to

to show each item lost or damaged from a

a casualty or theft loss, but if:

file a claim for the loss, you cannot realize a

single casualty or theft described on line 1. If

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Instructions For Form 4684 - Casualties And Thefts - 2012 Page 3

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