Instructions For Form 4684 - Casualties And Thefts

2016

Department of the Treasury

Internal Revenue Service

Instructions for Form 4684

Casualties and Thefts

(For use with 2016 Form 4684 (Rev. December 2017))

after November 21, 2017, damage to your

Progressive damage to property

Section references are to the Internal Revenue Code

unless otherwise noted.

personal residence resulting from

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

deteriorating concrete foundations caused

termites, moths, other insects, or disease.

General Instructions

by the presence of mineral pyrrhotite may be

A decline in market value of stock, caused

treated as a casualty loss. For more

by disclosure of accounting or other illegal

Future Developments

information on this safe harbor provision, see

misconduct by the officers or directors of the

Pub. 547, Casualties, Disasters, and Thefts.

corporation that issues the stock, that was

For the latest information about

acquired on the open market for investment.

Deducting disaster losses in the preced-

developments related to Form 4684 and its

You may be able to deduct it as a capital loss

ing year. Effective October 13, 2016, the

instructions, such as legislation enacted after

on Schedule D (Form 1040) if the stock is

due date for making an election to deduct a

they were published, go to

IRS.gov/

sold or exchanged or becomes completely

loss sustained in and attributable to a

Form4684.

worthless. See chapter 4 of Pub. 550,

federally declared disaster in the tax year

Investment Income and Expenses.

What’s New

immediately before the tax year in which the

loss was sustained has been extended by

Note. Victims of fraudulent investment

six months. The period for revoking the

Special rules and updated return proce-

schemes can claim a theft loss deduction if

election has also been extended to 90 days

dures for claiming qualified disaster los-

certain conditions apply. See

Losses From

after the due date for making the election.

ses. Many personal casualty losses

Ponzi-Type Investment

Schemes, later, for

See

Election to deduct loss in the preceding

resulting from federally declared disasters

more information.

year

for more information. For more

that occurred in 2016, as well as Hurricanes

information on disaster assistance and

Harvey, Irma, or Maria, may be claimed as a

Gain on Reimbursement

emergency relief for individuals, see

qualified disaster loss on your original or

If the amount you receive in insurance or

IRS.gov/DisasterRelief.

amended 2016 tax return by filing Form 4684

other reimbursement is more than the cost or

with the tax return. Form 4684 has been

Purpose of Form

other basis of the property, you have a gain.

updated to reflect special relief provided as

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

part of the Disaster Relief and Airport and

Use Form 4684 to report gains and losses

on it, or you may be able to postpone the

Airway Extension Act of 2017 and the Tax

from casualties and thefts. Attach Form 4684

gain.

Reform Act of 2017. For more information

to your tax return.

about claiming relief, see

Qualified disaster

Don't report the gain on damaged,

losses

and

Election to deduct loss in the

Losses You Can Deduct

destroyed, or stolen property if you receive

preceding

year, later. The special relief is

property that is similar or related to it in

You can deduct losses of property from fire,

described in the Specific Instructions for

service or use. Your basis in the new

storm, shipwreck, or other casualty, or theft

lines 11 and 15, later. Also see

IRS.gov/

property is the same as your basis in the old

(for example, larceny, embezzlement,

DisasterTaxRelief

for more information and

property.

robbery, and Ponzi-type investment

updates.

schemes). See Pub. 547, Casualties,

Any tangible replacement property held

Extended filing deadline for certain tax-

Disasters, and Thefts, for more examples.

for use in a trade or business is treated as

payers. If you previously obtained a

similar or related in service or use to property

If your property is covered by insurance,

6-month extension of time to file your original

held for use in a trade or business or for

you must file a timely insurance claim for

2016 return and you are an affected taxpayer

investment if:

reimbursement of your loss. Otherwise, you

due to a qualified disaster loss resulting from

The property you are replacing was

can't deduct the loss as a casualty or theft

Hurricanes Harvey, Irma, or Maria, or the

damaged or destroyed in a disaster, and

loss. However, the part of the loss that isn't

2017 California wildfires, you have until

The area in which the property was

covered by insurance is still deductible.

January 31, 2018 to timely file, except that

damaged or destroyed was declared by the

taxpayers affected by Hurricane Maria in

Related expenses. The related expenses

President of the United States to warrant

Puerto Rico or the U.S. Virgin Islands have

you have due to a casualty or theft, such as

federal assistance because of that disaster.

until June 29, 2018 to do so. See

IRS.gov/

expenses for the treatment of personal

DisasterTaxRelief

for more information on

Generally, you must recognize the gain if

injuries or for the rental of a car, aren't

which taxpayers have been granted

you receive unlike property or money as

deductible as casualty or theft losses.

additional time to file through January 31,

reimbursement. But you generally can

Costs for protection against future

2018 or through June 29, 2018.

choose to postpone all or part of the gain if,

casualties aren't deductible but should be

within 2 years of the end of the first tax year

Determining and reporting casualty los-

capitalized as permanent improvements. An

in which any part of the gain is realized, you

ses using safe harbor methods. You may

example would be the cost of a levee to stop

purchase:

be able to use certain safe harbor methods

flooding.

Property similar or related in service or

to determine the amount of your personal

use to the damaged, destroyed, or stolen

Losses You Can't Deduct

casualty and theft losses. For more

property, or

information, see

Safe harbor methods for

A controlling interest (at least 80%) in a

Money or property misplaced or lost may

determining casualty and theft

losses, later.

corporation owning such property.

not be deducted as a theft loss.

Damage caused by certain deteriorating

Breakage of china, glassware, furniture,

To postpone all of the gain, the cost of the

concrete foundations may be treated as

and similar items under normal conditions.

replacement property must be equal to or

casualty loss. Effective for federal income

more than the reimbursement you received

tax returns (including amended returns) filed

for your property. If the cost of the

Jan 29, 2018

Cat. No. 12998Z

Instructions For Form 4684 - Casualties And Thefts - 2016

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