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You are here:
Casualty, Disaster, and Theft Loss Workbook
|
584
15151M
Casualty,
Disaster, and
Theft Loss
Workbook
(Personal-Use Property)
What's New
Hurricane Katrina losses. Losses of personal-use property that arose in the Hurricane Katrina disaster area after August 24, 2005, and
that were caused by Hurricane Katrina, are not subject to the $100 rule or the 10% rule, defined later under Deduction limits.
This workbook is designed to help you figure your loss on personal-use property in the event of a disaster, casualty, or theft. It contains
schedules to help you figure the loss to your main home, its contents, and your motor vehicles. However, these schedules are for your information
only. You must complete Form 4684, Casualties and Thefts, to report your loss.
How To Use This Workbook
You can use this workbook by following these five steps.
Read Publication 547 to learn about the tax rules for casualties, disasters, and thefts.
Know the definitions of cost or other basis and fair market value, discussed later.
Fill out Schedules 1 through 20.
Read the instructions for Form 4684.
Fill out Form 4684 using the information you entered in Schedules 1 through 20.
Use the chart below to find out how to use Schedules 1 through 19 to fill out Form 4684.
Take what's in...
And enter it on Form 4684...
Column 1
Line 1
Column 2
Line 1
Column 3
Line 1
Column 4
Line 2
Column 5
Line 3
Column 6
Line 5
Column 7
Line 6
Column 8
Line 7
Column 9
Line 8
Column 10
Line 9
Losses
Generally, you may deduct losses to your home, household goods, and motor vehicles on your federal income tax return. However, you may not deduct a
casualty or theft loss that is covered by insurance unless you filed a timely insurance claim for reimbursement. Any reimbursement you receive will
reduce the loss. If you did not file an insurance claim, you may deduct only the part of the loss that was not covered by insurance.
Amount of loss.
You figure the amount of your loss using the following steps.
Determine your cost or other basis in the property before the casualty or theft.
Determine the decrease in fair market value of the property as a result of the casualty or theft. (The decrease in FMV is the difference
between the property's value immediately before and immediately after the casualty or theft.)
From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you received or expect to
receive.
Apply the deduction limits, discussed later, to determine the amount of your deductible loss.
Cost or other basis.
Cost or other basis usually means original cost plus improvements. If you did not acquire the property by purchasing it, your basis is determined
as discussed in Publication 551, Basis of Assets.
Fair market value.
Fair market value is the price for which you could sell your property to a willing buyer, when neither of you has to sell or buy and both of you
know all the relevant facts. When filling out Schedules 1 through 20, you need to know the fair market value of the property immediately before and
immediately after the disaster, casualty, or theft.
Separate computations.
Generally, if a single casualty or theft involves more than one item of property, you must figure the loss on each item separately. Then combine
the losses to determine the total loss from that casualty or theft.
Exception for personal-use real property.
In figuring a casualty loss on personal-use real property, the entire property (including any improvements, such as buildings, trees, and shrubs)
is treated as one item. Figure the loss using the smaller of the following.
The decrease in FMV of the entire property.
The adjusted basis of the entire property.
Deduction limits.
After you have figured the amount of your loss, as discussed earlier, you must figure how much of the loss you can deduct. You do this on Form
4684, section A. If the loss was to property for your personal use or your family's, there are two limits on the amount you can deduct for your
casualty or theft loss.
You must reduce each casualty or theft loss by $100 ($100 rule).
You must further reduce the total of all your losses by 10% of your adjusted gross income (10% rule).
Hurricane Katrina losses.
The above two limits do not apply to casualty or theft losses that arose in the Hurricane Katrina disaster area after August 24, 2005, and that
were caused by Hurricane Katrina.
More information.
For more information about the deduction limits, see Publication 547.
When your loss is deductible.
You can generally deduct a casualty or disaster area loss only in the tax year in which the casualty or disaster occurred. You can generally deduct
a theft loss only in the year you discovered your property was stolen. However, you can choose to deduct disaster area losses on your return for the
year immediately before the year of the disaster if the President has declared your area a federal disaster area. For details, see Disaster Area
Losses in Publication 547.
How to Get Tax Help
You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several
ways. By selecting the method that is best for you, you will have quick and easy access to tax help.
Contacting your Taxpayer Advocate.
Taxpayer Advocate
If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate.
The Taxpayer Advocate independently represents your interests and concerns within the IRS by protecting your rights and resolving problems that
have not been fixed through normal channels. While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up
problems that resulted from previous contacts and ensure that your case is given a complete and impartial review.
To contact your Taxpayer Advocate:
Call the Taxpayer Advocate toll free at
1-877-777-4778.
Call, write, or fax the Taxpayer Advocate office in your area.
Call 1-800-829-4059 if you are a
TTY/TDD user.
Visit
www.irs.gov/advocate.
For more information, see Publication 1546, How To Get Help With Unresolved Tax Problems (now available in Chinese, Korean, Russian, and
Vietnamese, in addition to English and Spanish).
Free tax services.
To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. It contains a list of free tax publications and an
index of tax topics. It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax
topics.
Internet. You can access the IRS website 24 hours a day, 7 days a week, at
www.irs.gov to:
E-file your return. Find out about commercial tax preparation and e-file services available free to eligible
taxpayers.
Check the status of your 2005 refund. Click on Where's My Refund. Be sure to wait at least 6 weeks from the date you filed your
return (3 weeks if you filed electronically). Have your 2005 tax return available because you will need to know your social security number, your
filing status, and the exact whole dollar amount of your refund.
Download forms, instructions, and publications.
Order IRS products online.
Research your tax questions online.
Search publications online by topic or keyword.
View Internal Revenue Bulletins (IRBs) published in the last few years.
Figure your withholding allowances using our Form W-4 calculator.
Sign up to receive local and national tax news by email.
Get information on starting and operating a small business.
Phone. Many services are available by phone.
Ordering forms, instructions, and publications. Call 1-800-829-3676 to order current-year forms, instructions, and publications
and prior-year forms and instructions. You should receive your order within 10 days.
Asking tax questions. Call the IRS with your tax questions at 1-800-829-1040.
Solving problems. You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. An
employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Call your local Taxpayer Assistance Center
for an appointment. To find the number, go to
www.irs.gov/localcontacts or
look in the phone book under United States Government, Internal Revenue Service.
TTY/TDD equipment. If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and
publications.
TeleTax topics. Call 1-800-829-4477 and press 2 to listen to pre-recorded messages covering various tax topics.
Refund information. If you would like to check the status of your 2005 refund, call 1-800-829-4477 and press 1 for automated
refund information or call 1-800-829-1954. Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically).
Have your 2005 tax return available because you will need to know your social security number, your filing status, and the exact whole dollar amount
of your refund.
Evaluating the quality of our telephone services. To ensure that IRS representatives give accurate, courteous, and professional answers,
we use several methods to evaluate the quality of our telephone services. One method is for a second IRS representative to sometimes listen in on or
record telephone calls. Another is to ask some callers to complete a short survey at the end of the call.
Walk-in. Many products and services are available on a walk-in basis.
Products. You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and
publications. Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores
have a collection of products available to print from a CD-ROM or photocopy from reproducible proofs. Also, some IRS offices and libraries have the
Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes.
Services. You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. An
employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. If you need to resolve a tax problem,
have questions about how the tax law applies to your individual tax return, or you're more comfortable talking with someone in person, visit your
local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. No appointment is necessary,
but if you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. A representative will
call you back within 2 business days to schedule an in-person appointment at your convenience. To find the number, go to
www.irs.gov/localcontacts or
look in the phone book under United States Government, Internal Revenue Service.
Mail. You can send your order for forms, instructions, and publications to the address below and receive a response within 10 business
days after your request is received.
National Distribution Center
P.O. Box 8903
Bloomington, IL 61702-8903
CD-ROM for tax products. You can order Publication 1796, IRS Tax Products CD-ROM, and obtain:
A CD that is released twice so you have the latest products. The first release ships in late December and the final release ships in late
February.
Current-year forms, instructions, and publications.
Prior-year forms, instructions, and publications.
Tax Map: an electronic research tool and finding aid.
Tax law frequently asked questions (FAQs).
Tax Topics from the IRS telephone response system.
Fill-in, print, and save features for most tax forms.
Internal Revenue Bulletins.
Toll-free and email technical support.
Buy the CD-ROM from National Technical Information Service (NTIS) at
www.irs.gov/cdorders for $25 (no handling fee) or call 1-877-233-6767 toll free to buy the CD-ROM for $25 (plus a $5 handling fee).
CD-ROM for small businesses. Publication 3207, The Small Business Resource Guide CD-ROM for 2005, has a new look and enhanced navigation
features. This year's CD includes:
Helpful information, such as how to prepare a business plan, find financing for your business, and much more.
All the business tax forms, instructions, and publications needed to successfully manage a business.
Tax law changes for 2005.
IRS Tax Map to help you find forms, instructions, and publications by searching on a keyword or topic.
Web links to various government agencies, business associations, and IRS organizations.
Rate the Product survey—your opportunity to suggest changes for future editions.
An updated version of this CD is available each year in early April. You can get a free copy by calling 1-800-829-3676 or by visiting
www.irs.gov/smallbiz.
Schedule 1. Entrance Hall
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
items that would be in an entrance hall.
Schedule 2. Living Room
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
items that would be in a living room.
Schedule 3. Dining Room
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
items that would be in a dining room.
Schedule 4. Kitchen
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
items that would be in a kitchen.
Schedule 5. Den
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
items that would be in a den.
Schedule 6. Bedrooms
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
items that would be in bedrooms.
Schedule 7. Bathrooms
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
items that would be in bathrooms.
Schedule 8. Recreation Room
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
items that would be in a recreation room.
Schedule 9. Laundry and Basement
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
items that would be in a laundry room and/or basement.
Schedule 10. Garage
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
items that would be in a garage.
Schedule 11. Sporting Equipment
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
items that would be categorized as sporting equipment.
Schedule 12. Men's Clothing
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
any items of men's clothing that may be lost due to theft or damage.
Schedule 13. Women's Clothing
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
any items of women's clothing that may be lost due to theft or damage.
Schedule 14. Children's Clothing
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
any items of children's clothing that may be lost due to theft or damage.
Schedule 15. Jewelry
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
any items of jewelry that may be lost due to theft or damage.
Schedule 16. Electrical Appliances
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
any electrical appliances that may be lost due to theft or damage.
Schedule 17. Linens
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
any linens that may be lost due to theft or damage.
Schedule 18. Miscellaneous
Summary: This is an example of a schedule used to record any losses to personal property for an individual taxpayer. This recordkeeping would
be used to help determine the amount of loss the taxpayer may be able to claim as credit/deduction on their return. This schedule is used to record
any miscellaneous items that are not covered on the other schedules (such as musical instruments or porch furniture) that may be lost due to theft or
damage.
Schedule 19. Motor Vehicles
Summary: This is an example of the schedule used to calculate total loss on vehicles that are stolen or damaged.
Schedule 20. Home (Excluding Contents)
Summary: This is an example of the schedule used to calculate the total loss on your home (excluding the
contents).
<ROM>Worksheet A.</ROM> Cost or Other (Adjusted) Basis
Caution. See the Worksheet A Instructions before you use this worksheet.
(a)
Personal
Part
(b)
Business/Rental Part
1.
Enter the purchase price of the home damaged or destroyed. (If you filed Form 2119 when you originally acquired that home to postpone gain on
the sale of a previous home before May 7, 1997, enter the adjusted basis of the new home from that Form 2119.)
1.
2.
Seller paid points for home bought after 1990. Do not include any seller-paid points you already subtracted to arrive at the amount
entered on line 1
2.
3.
Subtract line 2 from line 1
3.
4.
Settlement fees or closing costs. (See Settlement costs in Publication 551.) If line 1 includes the adjusted basis of the new home
from Form 2119, go to line 6.
a.
Abstract and recording fees
4a.
b.
Legal fees (including title search and preparing documents)
4b.
c.
Surveys
4c.
d.
Title insurance
4d.
e.
Transfer or stamp taxes
4e.
f.
Amounts that the seller owed that you agreed to pay (back taxes or interest, recording or mortgage fees, and sales commissions)
4f.
g.
Other
4g.
5.
Add lines 4a through 4g
5.
6.
Cost of additions and improvements. (See Increases to Basis in Publication 551.) Do not include any additions and
improvements included on line 1
6.
7.
Special tax assessments paid for local improvements, such as streets and sidewalks
7.
8.
Other increases to basis
8.
9.
Add lines 3, 5, 6, 7, and 8
9.
10.
Depreciation, related to the business use or rental of the home, (allowed or allowable)
10.
0
11.
Other decreases to basis (See Decreases to Basis in Publication 551.)
11.
12.
Add lines 10 and 11
12.
13.
Cost or other (adjusted) basis of home damaged or destroyed. Subtract line 12 from line 9. Enter here and on Schedule 20,
line 2
13.
<ROM>Worksheet A Instructions.</ROM>
If you use Worksheet A to figure the cost or other (adjusted) basis of your home, follow these
instructions.
IF...
THEN...
you inherited your home
1
skip lines 1–4 of the worksheet.
2
find your basis using the rules under Inherited Property in Publication 551. Enter this amount on line 5 of the
worksheet.
3
fill out the rest of the worksheet.
you received your home as a gift
1
read Property Received as Gift in Publication 551 and enter on lines 1 and 3 of the worksheet either the donor's
adjusted basis or the home's fair market value at the time of the gift, whichever is appropriate.
2
if you can add any federal gift tax to your basis, enter that amount on line 5 of the worksheet.
3
fill out the rest of the worksheet.
you received your home as a trade
1
the basis of your home is generally the fair market value of the other property at the time of the trade. Enter this amount
on line 1 of the worksheet. (But if you received your home as a trade for your previous home before May 7, 1997, and had a gain on the trade that you
postponed using Form 2119, enter on line 1 of the worksheet the adjusted basis of the new home from that Form 2119.)
2
fill out the rest of the worksheet.
you built your home
1
add the purchase price of the land and the cost of building the home. Enter that total on line 1 of the worksheet. (However,
if you filed a Form 2119 to postpone gain on the sale of a previous home before May 7, 1997, enter on line 1 of the worksheet the adjusted basis of
the new home from that Form 2119.)
2
fill out the rest of the worksheet.
you received your home from your spouse after July 18, 1984
1
skip lines 1–4 of the worksheet.
2
enter on line 5 of the worksheet your spouse's cost or other (adjusted) basis in the home just before you received
it.
3
fill out the rest of the worksheet, making adjustments to basis only for events after the transfer.
you owned a home jointly with your spouse, who transferred his or her interest in the home to you after July 18,
1984
fill out one worksheet, including adjustments to basis for events both before and after the
transfer.
you received your home from your spouse before July 19, 1984
1
skip lines 1–4 of the worksheet.
2
enter on line 5 of the worksheet the home's fair market value at the time you received it.
3
fill out the rest of the worksheet, making adjustments to basis only for events after the transfer.
you owned a home jointly with your spouse, and your spouse transferred his or her interest in the home to you
before July 19, 1984
1
fill out a worksheet, lines 1–13, making adjustments to basis only for events before the transfer.
2
multiply the amount on line 13 of that worksheet by one-half (0.5) to get the adjusted basis of your half-interest at the
time of the transfer.
3
multiply the fair market value of the home at the time of the transfer by one-half (0.5). Generally, this is the basis of
the half-interest that your spouse owned.
4
add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet.
5
complete the rest of the second worksheet, making adjustments to basis only for events after the
transfer.
Adjusted basis:
Worksheet 1 to figure
Worksheets:
Adjusted basis (Worksheet 1)
<ROM>Worksheet A Instructions. <ITL>(Continued)</ITL></ROM>
IF...
THEN...
you owned your home jointly with your spouse who died
1
fill out a worksheet, lines 1–13, making adjustments to basis only for events before your spouse's death.
2
multiply the amount on line 13 of that worksheet by one-half (0.5) to get the adjusted basis of your half-interest on the date
of death.
3
figure the basis for the half-interest owned by your spouse. This is one-half of the fair market value on the date of death (or
alternate valuation date). (The basis in your half will remain one-half of the adjusted basis determined in step 2.)
4
add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet.
5
complete the rest of the second worksheet, making adjustments to basis only for events after your spouse's death.
you owned your home jointly with your spouse who died, and your permanent home is in a community property
state
1
skip lines 1–4 of the worksheet.
2
enter the amount of your basis on line 5 of the worksheet. Generally, this is the fair market value of the home at the time of
death. (But see Community Property in Publication 551 for special rules.)
3
fill out the rest of the worksheet, making adjustments to basis only for events after your spouse's death.
your home was ever damaged as a result of a prior casualty
1
on line 8 of the worksheet, enter any amounts you spent to restore the home to its condition before the prior
casualty.
2
on line 11 enter:
any insurance reimbursements you received (or expect to receive) for the prior loss,
and
any deductible casualty losses from prior years not covered by insurance.
the person who sold you your home paid points on your loan and you bought your home after 1990 but before April 4, 1994.
on line 2 enter the seller-paid points only if you deducted them as home mortgage interest in the year paid (unless you used the seller-paid
points to reduce the amount on line 1).
the person who sold you your home paid points on your loan and you bought your home after April 3, 1994
on line 2 enter the seller-paid points even if you did not deduct them (unless you used the seller-paid points to reduce the amount on line
1).
you used part of the property as your home and part of it for business or to produce rental income
you must allocate the entries on Worksheet A between the personal part (column (a)) and the business/rental part (column (b)).
none of these items apply
fill out the entire worksheet.
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