Instructions For Form 4684 - Casualties And Thefts

method to determine your deductible

Allocation of Increase in Basis for Property

income, and is taxed in the same manner as

expenses for business use of your home.

Received From a Decedent, refer to the

your business income.

information provided by the executor or see

Main home destroyed. If you have a gain

Use Section B to figure casualty or theft

Pub. 4895, Tax Treatment of Property

because your main home was destroyed,

gains and losses for property that is used in

Acquired From a Decedent Dying in 2010,

you generally can exclude the gain from your

a trade or business or for income-producing

available at

IRS.gov/pub/irs-prior/

income as if you had sold or exchanged your

purposes.

p4895--2011.pdf.

home. You may be able to exclude up to

If property is used partly in a trade or

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

business and partly for personal purposes,

Line 3

married filing jointly). To exclude a gain, you

such as a personal home with a rental unit,

generally must have owned and lived in the

Enter on this line the amount of insurance or

figure the personal part in Section A and the

property as your main home for at least 2

other reimbursement you received or expect

business part in Section B.

years during the 5-year period ending on the

to receive for each property. Include your

date it was destroyed. For information on this

insurance coverage whether or not you are

Use Section C to figure a theft loss

exclusion, see Pub. 523, Selling Your Home.

filing a claim for reimbursement. For

deduction from a Ponzi-type investment

If you exclude the gain and the entire gain

example, your car worth $2,000 is totally

scheme if you qualify to use Revenue

is excludable, don't report the casualty on

destroyed in a collision. You are insured with

Procedure 2009-20, as modified by Revenue

Form 4684. If the gain is more than you can

a $500 deductible, but decide not to report it

Procedure 2011-58, and choose to follow the

exclude, reduce the insurance or other

to your insurance company because you are

procedures in the guidance. Section C of

reimbursement by the amount of the

afraid the insurance company will cancel

Form 4684 replaces Appendix A in Revenue

exclusion and enter the result on line 3.

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

Procedure 2009-20. You don't need to

Attach a statement showing the full amount

line.

complete Appendix A. See

Losses From

of insurance or other reimbursement and the

Ponzi-Type Investment

Schemes, later.

If you expect to be reimbursed but haven't

amount of the exclusion. You may be able to

Use Section D to elect (or revoke an

yet received payment, you must still enter

postpone reporting the excess gain if you

election) to deduct in the immediately

the expected reimbursement from the loss.

buy replacement property. See

Gain on

preceding tax year a loss that was

If, in a later tax year, you determine with

Reimbursement

and

Gains Realized on

attributable to a federally declared disaster,

reasonable certainty that you won't be

Homes in Disaster

Areas, earlier.

occurred in a federally declared disaster

reimbursed for all or part of the loss, you can

area, and was sustained in a disaster year

deduct for that year the amount of the loss

Line 4

after 2017.

that isn't reimbursed.

If you are entitled to an insurance payment or

Section A—Personal Use

Types of reimbursements. Insurance is

other reimbursement for any part of a

the most common way to be reimbursed for

Property

casualty or theft loss but you choose not to

a casualty or theft loss, but if:

file a claim for the loss, you can't realize a

Use a separate column for lines 2 through 9

Part of a federal disaster loan is forgiven,

gain from that payment or reimbursement.

to show each item lost or damaged from a

the part you don't have to pay back is

Therefore, figure the gain on line 4 by

single casualty or theft described on line 1. If

considered a reimbursement.

subtracting your cost or other basis in the

more than four items were lost or damaged,

The person who leases your property

property (line 2) only from the amount of

use additional sheets following the format of

must make repairs or must repay you for any

reimbursement you actually received. Enter

lines 1 through 9.

part of a loss, the repayment and the cost of

the result on line 4, but don't enter less than

the repairs are considered reimbursements.

Use a separate Form 4684 through

zero.

A court awards you damages for a

line 12 for each casualty or theft involving

casualty or theft loss, the amount you are

property not used in a trade or business or

If you filed a claim for reimbursement but

able to collect, minus lawyers' fees and other

for income-producing purposes. For

didn't receive it until after the year of the

necessary expenses, is a reimbursement.

example, use a separate Form 4684 through

casualty or theft, include the gain in your

You accept repairs, restoration, or

line 12 for property lost or damaged due to

income in the year you received the

cleanup services provided by relief agencies,

Hurricane Harvey, Hurricane Irma, or

reimbursement.

it is considered a reimbursement.

Hurricane Maria.

A bonding company pays you for a theft

Lines 5 and 6

Don't include any loss previously

loss, the payment also is considered a

deducted on an estate tax return.

reimbursement.

Fair market value (FMV) is the price at which

the property would be sold between a willing

Lump-sum reimbursement. If you have a

If you are liable for casualty or theft losses

buyer and a willing seller, each having

casualty or theft loss of several assets at the

to property you lease from someone else,

knowledge of the relevant facts. The

same time and you receive a lump-sum

see Leased property under Figuring a Loss

difference between the FMV immediately

reimbursement, you must divide the amount

in Pub. 547.

before the casualty or theft and the FMV

you receive among the assets according to

immediately after represents the decrease in

the fair market value of each asset at the

Line 1

FMV because of the casualty or theft.

time of the loss.

Describe the type of property (for example,

Grants, gifts, and other payments.

The FMV of property after a theft is zero if

furniture, jewelry, car, etc.).

Grants and other payments you receive to

the property isn't recovered.

help you after a casualty are considered

Line 2

reimbursements only if they must be used

FMV is generally determined by a

specifically to repair or replace your property.

Cost or other basis usually means original

competent appraisal. The appraiser's

Such payments will reduce your casualty

cost plus improvements. Subtract any

knowledge of sales of comparable property

loss deduction. If there are no conditions on

about the same time as the casualty or theft,

postponed gain from the sale of a previous

how you have to use the money you receive,

main home. Special rules apply to property

knowledge of your property before and after

it isn't a reimbursement.

received as a gift or inheritance. See Basis

the occurrence, and the methods of

determining FMV are important elements in

Other Than Cost in Pub. 551, Basis of

Use and occupancy insurance. If

Assets, for details. If you inherited the

proving your loss.

insurance reimburses you for your loss of

property from someone who died in 2010

business income, it doesn't reduce your

and the executor of the decedent's estate

The appraised value of property

casualty or theft loss. The reimbursement is

made the election to file Form 8939,

immediately after the casualty must be

-4-

Instructions For Form 4684 - Casualties And Thefts - 2016 Page 4

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