Instructions For Form 4684 - Casualties And Thefts

gain from that payment or reimbursement.

item. Figure the loss separately for other

casualty or theft loss on Form 8829,

Therefore, figure the gain on line 4 by

items. For example, figure the loss

Expenses for Business Use of Your Home.

subtracting your cost or other basis in the

separately for each piece of furniture.

Enter on Form 4684, line 27, the deductible

property (line 2) only from the amount of

loss from Form 8829, line 34, and “See Form

reimbursement you actually received. Enter

8829” above line 27. For a home you rented

Line 15

the result on line 4, but do not enter less than

out or used for a business for which you are

If line 14 is more than line 13:

zero.

not filing Schedule C (Form 1040), see

Combine your short-term gains with your

section 280A(c)(5) to figure your deductible

If you filed a claim for reimbursement but

short-term losses and include the net

loss. Attach a statement showing your

did not receive it until after the year of the

short-term gain or (loss) on Schedule D

computation of the deductible loss, enter that

casualty or theft, include the gain in your

(Form 1040), line 4. Estates and trusts

amount on line 27 and “See attached

income in the year you received the

include this amount on Schedule D (Form

statement” above line 27.

reimbursement.

1041), line 2.

Combine your long-term gains with your

Note. A gain or loss from a casualty or theft

long-term losses and include the net

Lines 5 and 6

of property used in a passive activity is not

long-term gain or (loss) on Schedule D

taken into account in determining the loss

Fair market value (FMV) is the price at which

(Form 1040), line 11. Estates and trusts

from a passive activity unless losses similar

the property would be sold between a willing

include this amount on Schedule D (Form

in cause and severity recur regularly in the

buyer and a willing seller, each having

1041), line 7.

activity. See Form 8582, Passive Activity

knowledge of the relevant facts. The

Loss Limitations, and its instructions for

difference between the FMV immediately

The holding period for long-term gains

details.

before the casualty or theft and the FMV

and losses is more than 1 year. For

immediately after represents the decrease in

short-term gains and losses, it is 1 year or

Section 179 Property of a

FMV because of the casualty or theft.

less. To figure the holding period, begin

counting on the day after you received the

Partnership or S Corporation

The FMV of property after a theft is zero if

property and include the day the casualty or

Partnerships (other than electing large

the property is not recovered.

theft occurred.

partnerships) and S corporations that have a

FMV is generally determined by a

casualty or theft involving property for which

Generally, if you inherit property, you are

the section 179 expense deduction was

competent appraisal. The appraiser's

considered to have held the property for

knowledge of sales of comparable property

previously claimed and passed through to

longer than 1 year, regardless of how long

about the same time as the casualty or theft,

the partners or shareholders must not use

you actually held it. If you inherited property

Form 4684 to report the transaction. Instead,

knowledge of your property before and after

from someone who died in 2010 and the

the occurrence, and the methods of

see the Instructions for Form 4797 for details

executor made the election to file Form

determining FMV are important elements in

on how to report it. Partners and S

8939, refer to the information provided by the

corporation shareholders who receive a

proving your loss.

executor or see Pub. 4895 to determine your

Schedule K-1 reporting such a transaction

holding period.

The appraised value of property

should see the Instructions for Form 4797 for

immediately after the casualty must be

details on how to figure the amount to enter

Line 17

adjusted (increased) for the effects of any

on Form 4684, line 20.

general market decline that may occur at the

Estates and trusts figure AGI in the same

same time as the casualty or theft. For

way as individuals, except that the costs of

Line 20

example, the value of all nearby property

administration are allowed in figuring AGI.

Cost or adjusted basis usually means

may become depressed because it is in an

Section B—Business and

original cost plus improvements, minus

area where such occurrences are

Income-Producing Property

depreciation allowed or allowable (including

commonplace. This general decline in

any section 179 expense deduction),

market value is not part of the property's

Use a separate column of Part I, lines 20

amortization, depletion, etc. Special rules

decrease in FMV as a result of the casualty

through 27, to show each item lost or

apply to property received as a gift or

or theft.

damaged from a single casualty or theft

inheritance. See Pub. 551 for details. If you

described on line 19. If more than four items

Replacement cost or the cost of repairs is

inherited the property from someone who

were lost or damaged, use additional sheets

not necessarily FMV. However, you may be

died in 2010 and the executor of the

following the format of Part I, lines 19 through

able to use the cost of repairs to the

decedent's estate made the election to file

27.

damaged property as evidence of loss in

Form 8939, refer to the information provided

value if:

by the executor or see Pub. 4895.

Use a separate Form 4684, Section B,

The repairs are actually made,

Part I, for each casualty or theft involving

property used in a trade or business or for

The repairs are necessary to restore the

Line 21

property to the condition it was in

income-producing purposes. Use one

See the instructions for

line

immediately before the casualty,

Section B, Part II, to combine all Sections B,

Part I.

The amount spent for repairs is not

excessive,

Line 22

For details on the treatment of casualties

The repairs only correct the damage

or thefts to business or income-producing

See the instructions for

line

caused by the casualty, and

property, including rules on the loss of

The value of the property after the repairs

inventory through casualty or theft, see Pub.

Lines 23 and 24

is not, as a result of the repairs, more than

547.

the value of the property immediately before

See the instructions for

lines 5 and 6

for

If you had a casualty or theft loss

the casualty.

details on determining FMV.

involving a home you used for business or

To figure a casualty loss to real estate not

rented out, your deductible loss may be

Loss on each item figured separately.

used in a trade, business, or for

limited. First, complete Form 4684, Section

Unlike a casualty loss to personal use real

income-producing purposes, measure the

B, lines 19 through 26. If the loss involved a

estate, in which all improvements are

decrease in value of the property as a whole.

home used for a business for which you are

considered one item, a casualty loss to

All improvements, such as buildings, trees,

filing Schedule C (Form 1040), Profit or Loss

business or income-producing property must

and shrubs, are considered together as one

From Business, figure your deductible

be figured separately for each item. For

-4-

Instructions For Form 4684 - Casualties And Thefts - 2012 Page 4

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