Instructions For Form 4684 - Casualties And Thefts

2017

Department of the Treasury

Internal Revenue Service

Instructions for Form 4684

Casualties and Thefts

Section D—Election To Deduct Federally

Note. Victims of fraudulent investment

Section references are to the Internal Revenue Code

unless otherwise noted.

Declared Disaster Loss in Preceding Tax

schemes can claim a theft loss deduction if

Year

for more information. For more

certain conditions apply. See

Losses From

General Instructions

information on disaster assistance and

Ponzi-Type Investment

Schemes, later, for

emergency relief for individuals, see

more information.

Future Developments

IRS.gov/DisasterRelief.

Gain on Reimbursement

For the latest information about

Purpose of Form

If the amount you receive in insurance or

developments related to Form 4684 and its

Use Form 4684 to report gains and losses

other reimbursement is more than the cost or

instructions, such as legislation enacted after

from casualties and thefts. Attach Form 4684

other basis of the property, you have a gain.

they were published, go to

IRS.gov/

to your tax return.

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

Form4684.

on it, or you may be able to postpone the

Losses You Can Deduct

What’s New

gain.

You can deduct losses of property from fire,

Don't report the gain on damaged,

Special rules and updated return proce-

storm, shipwreck, or other casualty, or theft

destroyed, or stolen property if you receive

dures for claiming qualified disaster los-

(for example, larceny, embezzlement,

property that is similar or related to it in

ses. Personal casualty losses resulting from

robbery, and Ponzi-type investment

service or use. Your basis in the new

federally declared disasters that occurred in

schemes). See Pub. 547 for more examples.

property is the same as your basis in the old

2016, as well as Hurricanes Harvey, Irma,

property.

If your property is covered by insurance,

and Maria, may be claimed as a qualified

you should file a timely insurance claim for

disaster loss on your Form 4684. See

When

Any tangible replacement property held

reimbursement of your loss. If you don't file

for use in a trade or business is treated as

To Deduct a

Loss, later. Form 4684 has

an insurance claim, you can't deduct the full

similar or related in service or use to property

been updated to reflect special relief

unrecovered amount as a casualty or theft

held for use in a trade or business or for

provided as part of the Disaster Relief and

loss and only the part of the loss that isn't

investment if:

Airport and Airway Extension Act of 2017

covered by your insurance policy is

The property you are replacing was

and the Tax Reform Act of 2017. For more

deductible.

damaged or destroyed in a disaster, and

information about claiming relief, see

The area in which the property was

Qualified disaster

losses, later. The special

Related expenses. The related expenses

damaged or destroyed was declared by the

relief is described in the Specific Instructions

you have due to a casualty or theft, such as

President of the United States to warrant

for lines 11 and 15, later. Also see

IRS.gov/

expenses for the treatment of personal

DisasterTaxRelief

for more information and

federal assistance because of that disaster.

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

updates.

deductible as casualty or theft losses.

Generally, you must recognize the gain if

Determining and reporting casualty los-

you receive unlike property or money as

Costs for protection against future

ses using safe harbor methods. You may

reimbursement. But you generally can

casualties aren't deductible but should be

be able to use certain safe harbor methods

choose to postpone all or part of the gain if,

capitalized as permanent improvements. An

to determine the amount of your personal

within 2 years of the end of the first tax year

example would be the cost of a levee to stop

casualty and theft losses. For more

in which any part of the gain is realized, you

flooding.

information, see

Safe harbor methods for

purchase:

Losses You Can't Deduct

determining casualty and theft

losses, later.

Property similar or related in service or

use to the damaged, destroyed, or stolen

Damage caused by certain deteriorating

Money or property misplaced or lost may

property, or

concrete foundations may be treated as

not be deducted as a theft loss.

A controlling interest (at least 80%) in a

casualty loss. Effective for federal income

Breakage of china, glassware, furniture,

corporation owning such property.

tax returns (including amended returns) filed

and similar items under normal conditions.

after November 21, 2017, damage to

To postpone all of the gain, the cost of the

Progressive damage to property

personal residences resulting from

replacement property must be equal to or

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

deteriorating concrete foundations caused

more than the reimbursement you received

termites, moths, other insects, or disease.

by the presence of mineral pyrrhotite may be

for your property. If the cost of the

See Pub. 547 for information on the

treated as a casualty loss. For more

replacement property is less than the

treatment of deteriorating concrete

information on this safe harbor provision, see

reimbursement received, you must recognize

foundations that contain the mineral

Pub. 547, Casualties, Disasters, and Thefts.

the gain to the extent the reimbursement

pyrrhotite.

exceeds the cost of the replacement

A decline in market value of stock, caused

2018 disaster losses. A new Section D

property.

by disclosure of accounting or other illegal

has been added to Form 4684 to make an

misconduct by the officers or directors of the

election (or revoke a prior election) to deduct

If the replacement property or stock is

corporation that issues the stock, that was

a loss sustained in a disaster area and

acquired from a related person, gain

acquired on the open market for investment.

attributable to a federally declared disaster in

generally can't be postponed by:

You may be able to deduct it as a capital loss

the tax year immediately preceding the

Corporations (other than S corporations),

on Schedule D (Form 1040) if the stock is

disaster year

(defined later). For disaster

Partnerships in which more than 50% of

sold or exchanged or becomes completely

years beginning in 2018, this election may be

the capital or profits interest is owned by

worthless. See chapter 4 of Pub. 550,

made by completing Section D on the 2017

corporations (other than S corporations), or

Investment Income and Expenses.

Form 4684 and attaching it to your return or

All other taxpayers, unless the aggregate

an amended return for 2017 that claims the

realized gains on the involuntarily converted

disaster loss deduction. See

property are $100,000 or less for the tax

Jan 26, 2018

Cat. No. 12998Z

Instructions For Form 4684 - Casualties And Thefts - 2017

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