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Amending Taxes After Filing

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Amending Taxes After Filing

Amending taxes after filing 10. Amending taxes after filing   Education Savings Bond Program Table of Contents Introduction Who Can Cash In Bonds Tax FreeAdjusted qualified education expenses. Amending taxes after filing Eligible educational institution. Amending taxes after filing Dependent for whom you claim an exemption. Amending taxes after filing MAGI when using Form 1040A. Amending taxes after filing MAGI when using Form 1040. Amending taxes after filing Figuring the Tax-Free AmountEffect of the Amount of Your Income on the Amount of Your Exclusion Claiming the Exclusion Introduction Generally, you must pay tax on the interest earned on U. Amending taxes after filing S. Amending taxes after filing savings bonds. Amending taxes after filing If you do not include the interest in income in the years it is earned, you must include it in your income in the year in which you cash in the bonds. Amending taxes after filing However, when you cash in certain savings bonds under an education savings bond program, you may be able to exclude the interest from income. Amending taxes after filing Who Can Cash In Bonds Tax Free You may be able to cash in qualified U. Amending taxes after filing S. Amending taxes after filing savings bonds without having to include in your income some or all of the interest earned on the bonds if you meet the following conditions. Amending taxes after filing You pay qualified education expenses for yourself, your spouse, or a dependent for whom you claim an exemption on your return. Amending taxes after filing Your modified adjusted gross income (MAGI) is less than the amount specified for your filing status. Amending taxes after filing Your filing status is not married filing separately. Amending taxes after filing Qualified U. Amending taxes after filing S. Amending taxes after filing savings bonds. Amending taxes after filing   A qualified U. Amending taxes after filing S. Amending taxes after filing savings bond is a series EE bond issued after 1989 or a series I bond. Amending taxes after filing The bond must be issued either in your name (as the sole owner) or in the name of both you and your spouse (as co-owners). Amending taxes after filing   The owner must be at least 24 years old before the bond's issue date. Amending taxes after filing The issue date is printed on the front of the savings bond. Amending taxes after filing    The issue date is not necessarily the date of purchase—it will be the first day of the month in which the bond is purchased (or posted, if bought electronically). Amending taxes after filing Qualified education expenses. Amending taxes after filing   These include the following items you pay for either yourself, your spouse, or a dependent for whom you claim an exemption. Amending taxes after filing Tuition and fees required to enroll at or attend an eligible educational institution. Amending taxes after filing Qualified education expenses do not include expenses for room and board or for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. Amending taxes after filing Contributions to a qualified tuition program (QTP) (see How Much Can You Contribute in chapter 8, Qualified Tuition Program). Amending taxes after filing Contributions to a Coverdell education savings account (ESA) (see Contributions in chapter 7, Coverdell Education Savings Account). Amending taxes after filing Adjusted qualified education expenses. Amending taxes after filing   You must reduce your qualified education expenses by all of the following tax-free benefits. Amending taxes after filing Tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions). Amending taxes after filing Expenses used to figure the tax-free portion of distributions from a Coverdell ESA (see Qualified Education Expenses in chapter 7, Coverdell Education Savings Account). Amending taxes after filing Expenses used to figure the tax-free portion of distributions from a QTP (see Qualified education expenses in chapter 8, Qualified Tuition Program). Amending taxes after filing Any tax-free payments (other than gifts or inheritances) received as educational assistance, such as: Veterans' educational assistance benefits (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Qualified tuition reductions (see Qualified Tuition Reduction in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), or Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ). Amending taxes after filing Any expenses used in figuring the American opportunity and lifetime learning credits. Amending taxes after filing See What Expenses Qualify in chapter 2, American Opportunity Credit, and What Expenses Qualify in chapter 3, Lifetime Learning Credit, for more information. Amending taxes after filing Eligible educational institution. Amending taxes after filing   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Amending taxes after filing S. Amending taxes after filing Department of Education. Amending taxes after filing It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Amending taxes after filing The educational institution should be able to tell you if it is an eligible educational institution. Amending taxes after filing   Certain educational institutions located outside the United States also participate in the U. Amending taxes after filing S. Amending taxes after filing Department of Education's Federal Student Aid (FSA) programs. Amending taxes after filing Dependent for whom you claim an exemption. Amending taxes after filing   You claim an exemption for a person if you list his or her name and other required information on Form 1040 (or Form 1040A), line 6c. Amending taxes after filing Modified adjusted gross income (MAGI). Amending taxes after filing   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return without taking into account this interest exclusion. Amending taxes after filing However, as discussed below, there may be other modifications. Amending taxes after filing MAGI when using Form 1040A. Amending taxes after filing   If you file Form 1040A, your MAGI is the AGI on line 22 of that form figured without taking into account any savings bond interest exclusion and modified by adding back any amount on line 18 (student loan interest deduction) and line 19 (tuition and fees deduction). Amending taxes after filing MAGI when using Form 1040. Amending taxes after filing   If you file Form 1040, your MAGI is the AGI on line 38 of that form figured without taking into account any savings bond interest exclusion and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, Exclusion of income by bona fide residents of Puerto Rico, Exclusion for adoption benefits received under an employer's adoption assistance program, Deduction for student loan interest, Deduction for tuition and fees, and Deduction for domestic production activities. Amending taxes after filing    Use the worksheet in the instructions for line 9 of Form 8815 to figure your MAGI. Amending taxes after filing If you claim any of the exclusion or deduction items (1)–(6) listed above, add the amount of the exclusion or deduction to the amount on line 5 of the worksheet. Amending taxes after filing Do not add in the deduction for (7) student loan interest, and (8) tuition and fees, or (9) domestic production activities because line 4 of the worksheet already includes these amounts. Amending taxes after filing Enter the total on Form 8815, line 9, as your modified adjusted gross income (MAGI). Amending taxes after filing    Because the deduction for interest expenses attributable to royalties and other investments is limited to your net investment income, you cannot figure the deduction until you have figured this interest exclusion. Amending taxes after filing Therefore, if you had interest expenses attributable to royalties and deductible on Schedule E (Form 1040), Supplemental Income and Loss, you must make a special computation of your deductible interest without regard to this exclusion to figure the net royalty income included in your MAGI. Amending taxes after filing See Royalties included in MAGI under Education Savings Bond Program in Publication 550, chapter 1. Amending taxes after filing Figuring the Tax-Free Amount If the total you receive when you cash in the bonds is not more than the adjusted qualified education expenses for the year, all of the interest on the bonds may be tax free. Amending taxes after filing However, if the total you receive when you cash in the bonds is more than the adjusted expenses, only part of the interest may be tax free. Amending taxes after filing To determine the tax-free amount, multiply the interest part of the proceeds by a fraction. Amending taxes after filing The numerator (top part) of the fraction is the adjusted qualified education expenses (AQEE) you paid during the year. Amending taxes after filing The denominator (bottom part) of the fraction is the total proceeds you received during the year. Amending taxes after filing Example. Amending taxes after filing In February 2013, Mark and Joan Washington, a married couple, cashed a qualified series EE U. Amending taxes after filing S. Amending taxes after filing savings bond. Amending taxes after filing They received proceeds of $9,000, representing principal of $6,000 and interest of $3,000. Amending taxes after filing In 2013, they paid $7,650 of their daughter's college tuition. Amending taxes after filing They are not claiming an American opportunity or lifetime learning credit for those expenses, and their daughter does not have any tax-free educational assistance. Amending taxes after filing Their MAGI for 2013 was $80,000. Amending taxes after filing   $3,000 interest × $7,650 AQEE  $9,000 proceeds = $2,550 tax-free interest   They can exclude $2,550 of interest in 2013. Amending taxes after filing They must pay tax on the remaining $450 ($3,000 − $2,550) interest. Amending taxes after filing Effect of the Amount of Your Income on the Amount of Your Exclusion The amount of your interest exclusion is gradually reduced (phased out) based on your MAGI and filing status. Amending taxes after filing Claiming the Exclusion Use Form 8815 to figure your education savings bond interest exclusion. Amending taxes after filing Enter your exclusion on line 3 of Schedule B (Form 1040A or 1040), Interest and Ordinary Dividends. Amending taxes after filing Attach Form 8815 to your tax return. Amending taxes after filing Prev  Up  Next   Home   More Online Publications
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Understanding your CP180/CP181 Notice

We sent you this notice because your tax return is missing a schedule or form.


What you need to do

  • Read the notice carefully to determine the required schedule or form needed to complete your return.
  • Download the required schedule or form or call 1-800-829-3676.
  • Fill out the Contact Information section of the notice, detach, and send it to us with your completed schedule or form so we receive it by the date indicated on the notice.

You may want to...

  • Review the filing requirements and instructions for the missing schedule or form to determine whether your organization needs to file.
  • Review your records to ensure all applicable schedules and forms were attached when filed.

Answers to Common Questions

What happens if I don't respond by the due date?
If you don't respond by the due date of the notice, your tax and/or credits may be adjusted which may result in a balance due.

Who do I call for assistance?
For assistance with your business return, call 1-800-829-0115 or, for assistance with Form 990-T, call 1-877-829-5500.


Tips for next year

Refer to the instructions for your tax return for required documentation. Attach all required forms and schedules to your tax return when filing.

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.


Understanding your notice

Your notice may look different from the sample because the information contained in your notice is tailored to your situation.

CP180

Notice CP180, Page 1
 

Notice CP180, Page 2
 

CP181

Notice CP181, Page 1
 

Notice CP181, Page 2
 

Page Last Reviewed or Updated: 01-Jul-2013

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Amending Taxes After Filing

Amending taxes after filing 11. Amending taxes after filing   Casualties, Thefts, and Condemnations Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Casualties and TheftsDeductible losses. Amending taxes after filing Nondeductible losses. Amending taxes after filing Family pet. Amending taxes after filing Progressive deterioration. Amending taxes after filing Decline in market value of stock. Amending taxes after filing Mislaid or lost property. Amending taxes after filing Farming Losses How To Figure a Loss Deduction Limits on Losses of Personal-Use Property When Loss Is Deductible Proof of Loss Figuring a Gain Other Involuntary ConversionsCondemnation Irrigation Project Livestock Losses Tree Seedlings Postponing GainException. Amending taxes after filing Related persons. Amending taxes after filing Replacement Property Replacement Period How To Postpone Gain Disaster Area LossesWho is eligible. Amending taxes after filing Covered disaster area. Amending taxes after filing Reporting Gains and Losses Introduction This chapter explains the tax treatment of casualties, thefts, and condemnations. Amending taxes after filing A casualty occurs when property is damaged, destroyed, or lost due to a sudden, unexpected, or unusual event. Amending taxes after filing A theft occurs when property is stolen. Amending taxes after filing A condemnation occurs when private property is legally taken for public use without the owner's consent. Amending taxes after filing A casualty, theft, or condemnation may result in a deductible loss or taxable gain on your federal income tax return. Amending taxes after filing You may have a deductible loss or a taxable gain even if only a portion of your property was affected by a casualty, theft, or condemnation. Amending taxes after filing An involuntary conversion occurs when you receive money or other property as reimbursement for a casualty, theft, condemnation, disposition of property under threat of condemnation, or certain other events discussed in this chapter. Amending taxes after filing If an involuntary conversion results in a gain and you buy qualified replacement property within the specified replacement period, you can postpone reporting the gain on your income tax return. Amending taxes after filing For more information, see Postponing Gain , later. Amending taxes after filing Topics - This chapter discusses: Casualties and thefts How to figure a loss or gain Other involuntary conversions Postponing gain Disaster area losses Reporting gains and losses Drought involving property connected with a trade or business or a transaction entered into for profit Useful Items - You may want to see: Publication 523 Selling Your Home 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 544 Sales and Other Dispositions of Assets 547 Casualties, Disasters, and Thefts 584 Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property) 584-B Business Casualty, Disaster, and Theft Loss Workbook Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch D (Form 1040) Capital Gains and Losses Sch F (Form 1040) Profit or Loss From Farming 4684 Casualties and Thefts 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. Amending taxes after filing Casualties and Thefts If your property is destroyed, damaged, or stolen, you may have a deductible loss. Amending taxes after filing If the insurance or other reimbursement is more than the adjusted basis of the destroyed, damaged, or stolen property, you may have a taxable gain. Amending taxes after filing Casualty. Amending taxes after filing   A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Amending taxes after filing A sudden event is one that is swift, not gradual or progressive. Amending taxes after filing An unexpected event is one that is ordinarily unanticipated and unintended. Amending taxes after filing An unusual event is one that is not a day-to-day occurrence and that is not typical of the activity in which you were engaged. Amending taxes after filing Deductible losses. Amending taxes after filing   Deductible casualty losses can result from a number of different causes, including the following. Amending taxes after filing Airplane crashes. Amending taxes after filing Car, truck, or farm equipment accidents not resulting from your willful act or willful negligence. Amending taxes after filing Earthquakes. Amending taxes after filing Fires (but see Nondeductible losses next for exceptions). Amending taxes after filing Floods. Amending taxes after filing Freezing. Amending taxes after filing Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster as discussed under Disaster Area Losses, in Publication 547. Amending taxes after filing Lightning. Amending taxes after filing Storms, including hurricanes and tornadoes. Amending taxes after filing Terrorist attacks. Amending taxes after filing Vandalism. Amending taxes after filing Volcanic eruptions. Amending taxes after filing Nondeductible losses. Amending taxes after filing   A casualty loss is not deductible if the damage or destruction is caused by the following. Amending taxes after filing Accidentally breaking articles such as glassware or china under normal conditions. Amending taxes after filing A family pet (explained below). Amending taxes after filing A fire if you willfully set it, or pay someone else to set it. Amending taxes after filing A car, truck, or farm equipment accident if your willful negligence or willful act caused it. Amending taxes after filing The same is true if the willful act or willful negligence of someone acting for you caused the accident. Amending taxes after filing Progressive deterioration (explained below). Amending taxes after filing Family pet. Amending taxes after filing   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed above under Casualty are met. Amending taxes after filing Example. Amending taxes after filing You keep your horse in your yard. Amending taxes after filing The ornamental fruit trees in your yard were damaged when your horse stripped the bark from them. Amending taxes after filing Some of the trees were completely girdled and died. Amending taxes after filing Because the damage was not unexpected or unusual, the loss is not deductible. Amending taxes after filing Progressive deterioration. Amending taxes after filing   Loss of property due to progressive deterioration is not deductible as a casualty loss. Amending taxes after filing This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Amending taxes after filing Examples of damage due to progressive deterioration include damage from rust, corrosion, or termites. Amending taxes after filing However, weather-related conditions or disease may cause another type of involuntary conversion. Amending taxes after filing See Other Involuntary Conversions , later. Amending taxes after filing Theft. Amending taxes after filing   A theft is the taking and removing of money or property with the intent to deprive the owner of it. Amending taxes after filing The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent. Amending taxes after filing You do not need to show a conviction for theft. Amending taxes after filing   Theft includes the taking of money or property by the following means: Blackmail, Burglary, Embezzlement, Extortion, Kidnapping for ransom, Larceny, Robbery, or Threats. Amending taxes after filing The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Amending taxes after filing Decline in market value of stock. Amending taxes after filing   You cannot deduct as a theft loss the decline in market value of stock acquired on the open market for investment if the decline is caused by disclosure of accounting fraud or other illegal misconduct by the officers or directors of the corporation that issued the stock. Amending taxes after filing However, you can deduct as a capital loss the loss you sustain when you sell or exchange the stock or the stock becomes completely worthless. Amending taxes after filing You report a capital loss on Schedule D (Form 1040). Amending taxes after filing For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Amending taxes after filing Mislaid or lost property. Amending taxes after filing   The simple disappearance of money or property is not a theft. Amending taxes after filing However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. Amending taxes after filing Example. Amending taxes after filing A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Amending taxes after filing The diamond falls from the ring and is never found. Amending taxes after filing The loss of the diamond is a casualty. Amending taxes after filing Farming Losses You can deduct certain casualty or theft losses that occur in the business of farming. Amending taxes after filing The following is a discussion of some losses you can deduct and some you cannot deduct. Amending taxes after filing Livestock or produce bought for resale. Amending taxes after filing   Casualty or theft losses of livestock or produce bought for resale are deductible if you report your income on the cash method. Amending taxes after filing If you report your income on an accrual method, take casualty and theft losses on property bought for resale by omitting the item from the closing inventory for the year of the loss. Amending taxes after filing You cannot take a separate deduction. Amending taxes after filing Livestock, plants, produce, and crops raised for sale. Amending taxes after filing   Losses of livestock, plants, produce, and crops raised for sale are generally not deductible if you report your income on the cash method. Amending taxes after filing You have already deducted the cost of raising these items as farm expenses, so their basis is equal to zero. Amending taxes after filing   For plants with a preproductive period of more than 2 years, you may have a deductible loss if you have a tax basis in the plants. Amending taxes after filing You usually have a tax basis if you capitalized the expenses associated with these plants under the uniform capitalization rules. Amending taxes after filing The uniform capitalization rules are discussed in chapter 6. Amending taxes after filing   If you report your income on an accrual method, casualty or theft losses are deductible only if you included the items in your inventory at the beginning of your tax year. Amending taxes after filing You get the deduction by omitting the item from your inventory at the close of your tax year. Amending taxes after filing You cannot take a separate casualty or theft deduction. Amending taxes after filing Income loss. Amending taxes after filing   A loss of future income is not deductible. Amending taxes after filing Example. Amending taxes after filing A severe flood destroyed your crops. Amending taxes after filing Because you are a cash method taxpayer and already deducted the cost of raising the crops as farm expenses, this loss is not deductible, as explained above under Livestock, plants, produce, and crops raised for sale . Amending taxes after filing You estimate that the crop loss will reduce your farm income by $25,000. Amending taxes after filing This loss of future income is also not deductible. Amending taxes after filing Loss of timber. Amending taxes after filing   If you sell timber downed as a result of a casualty, treat the proceeds from the sale as a reimbursement. Amending taxes after filing If you use the proceeds to buy qualified replacement property, you can postpone reporting the gain. Amending taxes after filing See Postponing Gain , later. Amending taxes after filing Property used in farming. Amending taxes after filing   Casualty and theft losses of property used in your farm business usually result in deductible losses. Amending taxes after filing If a fire or storm destroyed your barn, or you lose by casualty or theft an animal you bought for draft, breeding, dairy, or sport, you may have a deductible loss. Amending taxes after filing See How To Figure a Loss , later. Amending taxes after filing Raised draft, breeding, dairy, or sporting animals. Amending taxes after filing   Generally, losses of raised draft, breeding, dairy, or sporting animals do not result in deductible casualty or theft losses because you have no basis in the animals. Amending taxes after filing However, you may have a basis in the animal and therefore may be able to claim a deduction if either of the following situations applies to you. Amending taxes after filing You use inventories to determine your income and you included the animals in your inventory. Amending taxes after filing You capitalized the expenses associated with the animals under the uniform capitalization rules and therefore have a tax basis in the animals subject to a casualty or theft. Amending taxes after filing When you include livestock in inventory, its last inventory value is its basis. Amending taxes after filing When you lose an inventoried animal held for draft, breeding, dairy, or sport by casualty or theft during the year, decrease ending inventory by the amount you included in inventory for the animal. Amending taxes after filing You cannot take a separate deduction. Amending taxes after filing How To Figure a Loss How you figure a deductible casualty or theft loss depends on whether the loss was to farm or personal-use property and whether the property was stolen or partly or completely destroyed. Amending taxes after filing Farm property. Amending taxes after filing   Farm property is the property you use in your farming business. Amending taxes after filing If your farm property was completely destroyed or stolen, your loss is figured as follows:      Your adjusted basis in the property     MINUS     Any salvage value     MINUS     Any insurance or other reimbursement you  receive or expect to receive      You can use the schedules in Publication 584-B to list your stolen, damaged, or destroyed business property and to figure your loss. Amending taxes after filing   If your farm property was partially damaged, use the steps shown under Personal-use property next to figure your casualty loss. Amending taxes after filing However, the deduction limits, discussed later, do not apply to farm property. Amending taxes after filing Personal-use property. Amending taxes after filing   Personal-use property is property used by you or your family members for personal purposes and not used in your farm business or for income-producing purposes. Amending taxes after filing The following items are examples of personal-use property: Your main home. Amending taxes after filing Furniture and electronics used in your main home and not used in a home office or for business purposes. Amending taxes after filing Clothing and jewelry. Amending taxes after filing An automobile used for nonbusiness purposes. Amending taxes after filing You figure the casualty or theft loss on this property by taking the following steps. Amending taxes after filing Determine your adjusted basis in the property before the casualty or theft. Amending taxes after filing Determine the decrease in fair market value of the property as a result of the casualty or theft. Amending taxes after filing From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you receive or expect to receive. Amending taxes after filing You must apply the deduction limits, discussed later, to determine your deductible loss. Amending taxes after filing    You can use Publication 584 to list your stolen or damaged personal-use property and figure your loss. Amending taxes after filing It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. Amending taxes after filing Adjusted basis. Amending taxes after filing   Adjusted basis is your basis (usually cost) increased or decreased by various events, such as improvements and casualty losses. Amending taxes after filing For more information about adjusted basis, see chapter 6. Amending taxes after filing Decrease in fair market value (FMV). Amending taxes after filing   The decrease in FMV is the difference between the property's value immediately before the casualty or theft and its value immediately afterward. Amending taxes after filing FMV is defined in chapter 10 under Payments Received or Considered Received . Amending taxes after filing Appraisal. Amending taxes after filing   To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Amending taxes after filing But other measures, such as the cost of cleaning up or making repairs (discussed next) can be used to establish decreases in FMV. Amending taxes after filing   An appraisal to determine the difference between the FMV of the property immediately before a casualty or theft and immediately afterward should be made by a competent appraiser. Amending taxes after filing The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Amending taxes after filing This information is needed to limit any deduction to the actual loss resulting from damage to the property. Amending taxes after filing Cost of cleaning up or making repairs. Amending taxes after filing   The cost of cleaning up after a casualty is not part of a casualty loss. Amending taxes after filing Neither is the cost of repairing damaged property after a casualty. Amending taxes after filing But you can use the cost of cleaning up or making repairs after a casualty as a measure of the decrease in FMV if you meet all the following conditions. Amending taxes after filing The repairs are actually made. Amending taxes after filing The repairs are necessary to bring the property back to its condition before the casualty. Amending taxes after filing The amount spent for repairs is not excessive. Amending taxes after filing The repairs fix the damage only. Amending taxes after filing The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Amending taxes after filing Related expenses. Amending taxes after filing   The incidental expenses due to a casualty or theft, such as expenses for the treatment of personal injuries, temporary housing, or a rental car, are not part of your casualty or theft loss. Amending taxes after filing However, they may be deductible as farm business expenses if the damaged or stolen property is farm property. Amending taxes after filing Separate computations for more than one item of property. Amending taxes after filing   Generally, if a single casualty or theft involves more than one item of property, you must figure your loss separately for each item of property. Amending taxes after filing Then combine the losses to determine your total loss. Amending taxes after filing    There is an exception to this rule for personal-use real property. Amending taxes after filing See Exception for personal-use real property, later. Amending taxes after filing Example. Amending taxes after filing A fire on your farm damaged a tractor and the barn in which it was stored. Amending taxes after filing The tractor had an adjusted basis of $3,300. Amending taxes after filing Its FMV was $28,000 just before the fire and $10,000 immediately afterward. Amending taxes after filing The barn had an adjusted basis of $28,000. Amending taxes after filing Its FMV was $55,000 just before the fire and $25,000 immediately afterward. Amending taxes after filing You received insurance reimbursements of $2,100 on the tractor and $26,000 on the barn. Amending taxes after filing Figure your deductible casualty loss separately for the two items of property. Amending taxes after filing     Tractor Barn 1) Adjusted basis $3,300 $28,000 2) FMV before fire $28,000 $55,000 3) FMV after fire 10,000 25,000 4) Decrease in FMV  (line 2 − line 3) $18,000 $30,000 5) Loss (lesser of line 1 or line 4) $3,300 $28,000 6) Minus: Insurance 2,100 26,000 7) Deductible casualty loss $1,200 $2,000 8) Total deductible casualty loss $3,200 Exception for personal-use real property. Amending taxes after filing   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. Amending taxes after filing Figure the loss using the smaller of the following. Amending taxes after filing The decrease in FMV of the entire property. Amending taxes after filing The adjusted basis of the entire property. Amending taxes after filing Example. Amending taxes after filing You bought a farm in 1990 for $160,000. Amending taxes after filing The adjusted basis of the residential part is now $128,000. Amending taxes after filing In 2013, a windstorm blew down shade trees and three ornamental trees planted at a cost of $7,500 on the residential part. Amending taxes after filing The adjusted basis of the residential part includes the $7,500. Amending taxes after filing The fair market value (FMV) of the residential part immediately before the storm was $400,000, and $385,000 immediately after the storm. Amending taxes after filing The trees were not covered by insurance. Amending taxes after filing 1) Adjusted basis $128,000 2) FMV before the storm $400,000 3) FMV after the storm 385,000 4) Decrease in FMV (line 2 − line 3) $15,000 5) Loss before insurance (lesser of line 1 or line 4) $15,000 6) Minus: Insurance -0- 7) Amount of loss $15,000 Insurance and other reimbursements. Amending taxes after filing   If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Amending taxes after filing You do not have a casualty or theft loss to the extent you are reimbursed. Amending taxes after filing   If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Amending taxes after filing You must reduce your loss even if you do not receive payment until a later tax year. Amending taxes after filing    Do not subtract from your loss any insurance payments you receive for living expenses if you lose the use of your main home or are denied access to it because of a casualty. Amending taxes after filing You may have to include a portion of these payments in your income. Amending taxes after filing See Insurance payments for living expenses in Publication 547 for details. Amending taxes after filing Disaster relief. Amending taxes after filing   Food, medical supplies, and other forms of assistance you receive do not reduce your casualty loss, unless they are replacements for lost or destroyed property. Amending taxes after filing Excludable cash gifts you receive also do not reduce your casualty loss if there are no limits on how you can use the money. Amending taxes after filing   Generally, disaster relief grants received under the Robert T. Amending taxes after filing Stafford Disaster Relief and Emergency Assistance Act are not included in your income. Amending taxes after filing See Federal disaster relief grants , later, under Disaster Area Losses . Amending taxes after filing   Qualified disaster relief payments for expenses you incurred as a result of a federally declared disaster are not taxable income to you. Amending taxes after filing See Qualified disaster relief payments , later, under Disaster Area Losses . Amending taxes after filing Reimbursement received after deducting loss. Amending taxes after filing   If you figure your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement. Amending taxes after filing Actual reimbursement less than expected. Amending taxes after filing   If you later receive less reimbursement than you expected, include that difference as a loss with your other losses (if any) on your return for the year in which you can reasonably expect no more reimbursement. Amending taxes after filing Actual reimbursement more than expected. Amending taxes after filing   If you later receive more reimbursement than you expected after you have claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. Amending taxes after filing However, if any part of your original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. Amending taxes after filing Do not refigure your tax for the year you claimed the deduction. Amending taxes after filing See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. Amending taxes after filing If the total of all the reimbursements you receive is more than your adjusted basis in the destroyed or stolen property, you will have a gain on the casualty or theft. Amending taxes after filing See Figuring a Gain in Publication 547 for information on how to treat a gain from the reimbursement you receive because of a casualty or theft. Amending taxes after filing Actual reimbursement same as expected. Amending taxes after filing   If you receive exactly the reimbursement you expected to receive, you do not have to include any of the reimbursement in your income and you cannot deduct any additional loss. Amending taxes after filing Lump-sum reimbursement. Amending taxes after filing   If you have a casualty or theft loss of several assets at the same time without an allocation of reimbursement to specific assets, divide the lump-sum reimbursement among the assets according to the fair market value of each asset at the time of the loss. Amending taxes after filing Figure the gain or loss separately for each asset that has a separate basis. Amending taxes after filing Adjustments to basis. Amending taxes after filing   If you have a casualty or theft loss, you must decrease your basis in the property by any insurance or other reimbursement you receive and by any deductible loss. Amending taxes after filing The result is your adjusted basis in the property. Amending taxes after filing Amounts you spend on repairs to restore your property to its pre-casualty condition increase your adjusted basis. Amending taxes after filing See Adjusted Basis in chapter 6 for more information. Amending taxes after filing Example. Amending taxes after filing You built a new silo for $25,000. Amending taxes after filing This is the basis in your silo because that is the total cost you incurred to build it. Amending taxes after filing During the year, a tornado damaged your silo and your allowable casualty loss deduction was $1,000. Amending taxes after filing In addition, your insurance company reimbursed you $4,000 for the damage and you spent $6,000 to restore the silo to its pre-casualty condition. Amending taxes after filing Your adjusted basis in the silo after the casualty is $26,000 ($25,000 - $1,000 - $4,000 + $6,000). Amending taxes after filing Deduction Limits on Losses of Personal-Use Property Casualty and theft losses of property held for personal use may be deductible if you itemize deductions on Schedule A (Form 1040). Amending taxes after filing There are two limits on the deduction for casualty or theft loss of personal-use property. Amending taxes after filing You figure these limits on Form 4684. Amending taxes after filing $100 rule. Amending taxes after filing   You must reduce each casualty or theft loss on personal-use property by $100. Amending taxes after filing This rule applies after you have subtracted any reimbursement. Amending taxes after filing 10% rule. Amending taxes after filing   You must further reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Amending taxes after filing Apply this rule after you reduce each loss by $100. Amending taxes after filing Adjusted gross income is on line 38 of Form 1040. Amending taxes after filing Example. Amending taxes after filing In June, you discovered that your house had been burglarized. Amending taxes after filing Your loss after insurance reimbursement was $2,000. Amending taxes after filing Your adjusted gross income for the year you discovered the burglary is $57,000. Amending taxes after filing Figure your theft loss deduction as follows: 1. Amending taxes after filing Loss after insurance $2,000 2. Amending taxes after filing Subtract $100 100 3. Amending taxes after filing Loss after $100 rule $1,900 4. Amending taxes after filing Subtract 10% (. Amending taxes after filing 10) × $57,000 AGI $5,700 5. Amending taxes after filing Theft loss deduction -0- You do not have a theft loss deduction because your loss ($1,900) is less than 10% of your adjusted gross income ($5,700). Amending taxes after filing    If you have a casualty or theft gain in addition to a loss, you will have to make a special computation before you figure your 10% limit. Amending taxes after filing See 10% Rule in Publication 547. Amending taxes after filing When Loss Is Deductible Generally, you can deduct casualty losses that are not reimbursable only in the tax year in which they occur. Amending taxes after filing You generally can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. Amending taxes after filing However, losses in federally declared disaster areas are subject to different rules. Amending taxes after filing See Disaster Area Losses , later, for an exception. Amending taxes after filing If you are not sure whether part of your casualty or theft loss will be reimbursed, do not deduct that part until the tax year when you become reasonably certain that it will not be reimbursed. Amending taxes after filing Leased property. Amending taxes after filing   If you lease property from someone else, you can deduct a loss on the property in the year your liability for the loss is fixed. Amending taxes after filing This is true even if the loss occurred or the liability was paid in a different year. Amending taxes after filing You are not entitled to a deduction until your liability under the lease can be determined with reasonable accuracy. Amending taxes after filing Your liability can be determined when a claim for recovery is settled, adjudicated, or abandoned. Amending taxes after filing Example. Amending taxes after filing Robert leased a tractor from First Implement, Inc. Amending taxes after filing , for use in his farm business. Amending taxes after filing The tractor was destroyed by a tornado in June 2012. Amending taxes after filing The loss was not insured. Amending taxes after filing First Implement billed Robert for the fair market value of the tractor on the date of the loss. Amending taxes after filing Robert disagreed with the bill and refused to pay it. Amending taxes after filing First Implement later filed suit in court against Robert. Amending taxes after filing In 2013, Robert and First Implement agreed to settle the suit for $20,000, and the court entered a judgment in favor of First Implement. Amending taxes after filing Robert paid $20,000 in June 2013. Amending taxes after filing He can claim the $20,000 as a loss on his 2013 tax return. Amending taxes after filing Net operating loss (NOL). Amending taxes after filing   If your deductions, including casualty or theft loss deductions, are more than your income for the year, you may have an NOL. Amending taxes after filing An NOL can be carried back or carried forward and deducted from income in other years. Amending taxes after filing See Publication 536 for more information on NOLs. Amending taxes after filing Proof of Loss To deduct a casualty or theft loss, you must be able to prove that there was a casualty or theft. Amending taxes after filing You must have records to support the amount you claim for the loss. Amending taxes after filing Casualty loss proof. Amending taxes after filing   For a casualty loss, your records should show all the following information. Amending taxes after filing The type of casualty (car accident, fire, storm, etc. Amending taxes after filing ) and when it occurred. Amending taxes after filing That the loss was a direct result of the casualty. Amending taxes after filing That you were the owner of the property or, if you leased the property from someone else, that you were contractually liable to the owner for the damage. Amending taxes after filing Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Amending taxes after filing Theft loss proof. Amending taxes after filing   For a theft loss, your records should show all the following information. Amending taxes after filing When you discovered your property was missing. Amending taxes after filing That your property was stolen. Amending taxes after filing That you were the owner of the property. Amending taxes after filing Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Amending taxes after filing Figuring a Gain A casualty or theft may result in a taxable gain. Amending taxes after filing If you receive an insurance payment or other reimbursement that is more than your adjusted basis in the destroyed, damaged, or stolen property, you have a gain from the casualty or theft. Amending taxes after filing You generally report your gain as income in the year you receive the reimbursement. Amending taxes after filing However, depending on the type of property you receive, you may not have to report your gain. Amending taxes after filing See Postponing Gain , later. Amending taxes after filing Your gain is figured as follows: The amount you receive, minus Your adjusted basis in the property at the time of the casualty or theft. Amending taxes after filing Even if the decrease in FMV of your property is smaller than the adjusted basis of your property, use your adjusted basis to figure the gain. Amending taxes after filing Amount you receive. Amending taxes after filing   The amount you receive includes any money plus the value of any property you receive, minus any expenses you have in obtaining reimbursement. Amending taxes after filing It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. Amending taxes after filing Example. Amending taxes after filing A tornado severely damaged your barn. Amending taxes after filing The adjusted basis of the barn was $25,000. Amending taxes after filing Your insurance company reimbursed you $40,000 for the damaged barn. Amending taxes after filing However, you had legal expenses of $2,000 to collect that insurance. Amending taxes after filing Your insurance minus your expenses to collect the insurance is more than your adjusted basis in the barn, so you have a gain. Amending taxes after filing 1) Insurance reimbursement $40,000 2) Legal expenses 2,000 3) Amount received  (line 1 − line 2) $38,000 4) Adjusted basis 25,000 5) Gain on casualty (line 3 − line 4) $13,000 Other Involuntary Conversions In addition to casualties and thefts, other events cause involuntary conversions of property. Amending taxes after filing Some of these are discussed in the following paragraphs. Amending taxes after filing Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes. Amending taxes after filing You report the gain or deduct the loss on your tax return for the year you realize it. Amending taxes after filing However, depending on the type of property you receive, you may not have to report your gain on the involuntary conversion. Amending taxes after filing See Postponing Gain , later. Amending taxes after filing Condemnation Condemnation is the process by which private property is legally taken for public use without the owner's consent. Amending taxes after filing The property may be taken by the federal government, a state government, a political subdivision, or a private organization that has the power to legally take property. Amending taxes after filing The owner receives a condemnation award (money or property) in exchange for the property taken. Amending taxes after filing A condemnation is a forced sale, the owner being the seller and the condemning authority being the buyer. Amending taxes after filing Threat of condemnation. Amending taxes after filing   Treat the sale of your property under threat of condemnation as a condemnation, provided you have reasonable grounds to believe that your property will be condemned. Amending taxes after filing Main home condemned. Amending taxes after filing   If you have a gain because your main home is condemned, you generally can exclude the gain from your income as if you had sold or exchanged your home. Amending taxes after filing For information on this exclusion, see Publication 523. Amending taxes after filing If your gain is more than the amount you can exclude, but you buy replacement property, you may be able to postpone reporting the excess gain. Amending taxes after filing See Postponing Gain , later. Amending taxes after filing (You cannot deduct a loss from the condemnation of your main home. Amending taxes after filing ) More information. Amending taxes after filing   For information on how to figure the gain or loss on condemned property, see chapter 1 in Publication 544. Amending taxes after filing Also see Postponing Gain , later, to find out if you can postpone reporting the gain. Amending taxes after filing Irrigation Project The sale or other disposition of property located within an irrigation project to conform to the acreage limits of federal reclamation laws is an involuntary conversion. Amending taxes after filing Livestock Losses Diseased livestock. Amending taxes after filing   If your livestock die from disease, or are destroyed, sold, or exchanged because of disease, even though the disease is not of epidemic proportions, treat these occurrences as involuntary conversions. Amending taxes after filing If the livestock were raised or purchased for resale, follow the rules for livestock discussed earlier under Farming Losses . Amending taxes after filing Otherwise, figure the gain or loss from these conversions using the rules discussed under Determining Gain or Loss in chapter 8. Amending taxes after filing If you replace the livestock, you may be able to postpone reporting the gain. Amending taxes after filing See Postponing Gain below. Amending taxes after filing Reporting dispositions of diseased livestock. Amending taxes after filing   If you choose to postpone reporting gain on the disposition of diseased livestock, you must attach a statement to your return explaining that the livestock were disposed of because of disease. Amending taxes after filing You must also include other information on this statement. Amending taxes after filing See How To Postpone Gain , later, under Postponing Gain . Amending taxes after filing Weather-related sales of livestock. Amending taxes after filing   If you sell or exchange livestock (other than poultry) held for draft, breeding, or dairy purposes solely because of drought, flood, or other weather-related conditions, treat the sale or exchange as an involuntary conversion. Amending taxes after filing Only livestock sold in excess of the number you normally would sell under usual business practice, in the absence of weather-related conditions, are considered involuntary conversions. Amending taxes after filing Figure the gain or loss using the rules discussed under Determining Gain or Loss in chapter 8. Amending taxes after filing If you replace the livestock, you may be able to postpone reporting the gain. Amending taxes after filing See Postponing Gain below. Amending taxes after filing Example. Amending taxes after filing It is your usual business practice to sell five of your dairy animals during the year. Amending taxes after filing This year you sold 20 dairy animals because of drought. Amending taxes after filing The sale of 15 animals is treated as an involuntary conversion. Amending taxes after filing    If you do not replace the livestock, you may be able to report the gain in the following year's income. Amending taxes after filing This rule also applies to other livestock (including poultry). Amending taxes after filing See Sales Caused by Weather-Related Conditions in chapter 3. Amending taxes after filing Tree Seedlings If, because of an abnormal drought, the failure of planted tree seedlings is greater than normally anticipated, you may have a deductible loss. Amending taxes after filing Treat the loss as a loss from an involuntary conversion. Amending taxes after filing The loss equals the previously capitalized reforestation costs you had to duplicate on replanting. Amending taxes after filing You deduct the loss on the return for the year the seedlings died. Amending taxes after filing Postponing Gain Do not report a gain if you receive reimbursement in the form of property similar or related in service or use to the destroyed, stolen, or other involuntarily converted property. Amending taxes after filing Your basis in the new property is generally the same as your adjusted basis in the property it replaces. Amending taxes after filing You must ordinarily report the gain on your stolen, destroyed, or other involuntarily converted property if you receive money or unlike property as reimbursement. Amending taxes after filing However, you can choose to postpone reporting the gain if you purchase replacement property similar or related in service or use to your destroyed, stolen, or other involuntarily converted property within a specific replacement period. Amending taxes after filing If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. Amending taxes after filing To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. Amending taxes after filing If the cost of the replacement property is less than the reimbursement, you must include the gain in your income up to the amount of the unspent reimbursement. Amending taxes after filing Example 1. Amending taxes after filing In 1985, you constructed a barn to store farm equipment at a cost of $20,000. Amending taxes after filing In 1987, you added a silo to the barn at a cost of $15,000 to store grain. Amending taxes after filing In May of this year, the property was worth $100,000. Amending taxes after filing In June the barn and silo were destroyed by a tornado. Amending taxes after filing At the time of the tornado, you had an adjusted basis of $0 in the property. Amending taxes after filing You received $85,000 from the insurance company. Amending taxes after filing You had a gain of $85,000 ($85,000 – $0). Amending taxes after filing You spent $80,000 to rebuild the barn and silo. Amending taxes after filing Since this is less than the insurance proceeds received, you must include $5,000 ($85,000 – $80,000) in your income. Amending taxes after filing Example 2. Amending taxes after filing In 1970, you bought a cabin in the mountains for your personal use at a cost of $18,000. Amending taxes after filing You made no further improvements or additions to it. Amending taxes after filing When a storm destroyed the cabin this January, the cabin was worth $250,000. Amending taxes after filing You received $146,000 from the insurance company in March. Amending taxes after filing You had a gain of $128,000 ($146,000 − $18,000). Amending taxes after filing You spent $144,000 to rebuild the cabin. Amending taxes after filing Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. Amending taxes after filing Buying replacement property from a related person. Amending taxes after filing   You cannot postpone reporting a gain from a casualty, theft, or other involuntary conversion if you buy the replacement property from a related person (discussed later). Amending taxes after filing This rule applies to the following taxpayers. Amending taxes after filing C corporations. Amending taxes after filing Partnerships in which more than 50% of the capital or profits interest is owned by C corporations. Amending taxes after filing Individuals, partnerships (other than those in (2) above), and S corporations if the total realized gain for the tax year on all involuntarily converted properties on which there are realized gains is more than $100,000. Amending taxes after filing For involuntary conversions described in (3) above, gains cannot be offset by any losses when determining whether the total gain is more than $100,000. Amending taxes after filing If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. Amending taxes after filing If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. Amending taxes after filing Exception. Amending taxes after filing   This rule does not apply if the related person acquired the property from an unrelated person within the period of time allowed for replacing the involuntarily converted property. Amending taxes after filing Related persons. Amending taxes after filing   Under this rule, related persons include, for example, a parent and child, a brother and sister, a corporation and an individual who owns more than 50% of its outstanding stock, and two partnerships in which the same C corporations own more than 50% of the capital or profits interests. Amending taxes after filing For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Amending taxes after filing Death of a taxpayer. Amending taxes after filing   If a taxpayer dies after having a gain, but before buying replacement property, the gain must be reported for the year in which the decedent realized the gain. Amending taxes after filing The executor of the estate or the person succeeding to the funds from the involuntary conversion cannot postpone reporting the gain by buying replacement property. Amending taxes after filing Replacement Property You must buy replacement property for the specific purpose of replacing your property. Amending taxes after filing Your replacement property must be similar or related in service or use to the property it replaces. Amending taxes after filing You do not have to use the same funds you receive as reimbursement for your old property to acquire the replacement property. Amending taxes after filing If you spend the money you receive for other purposes, and borrow money to buy replacement property, you can still choose to postpone reporting the gain if you meet the other requirements. Amending taxes after filing Property you acquire by gift or inheritance does not qualify as replacement property. Amending taxes after filing Owner-user. Amending taxes after filing   If you are an owner-user, similar or related in service or use means that replacement property must function in the same way as the property it replaces. Amending taxes after filing Examples of property that functions in the same way as the property it replaces are a home that replaces another home, a dairy cow that replaces another dairy cow, and farm land that replaces other farm land. Amending taxes after filing A grinding mill that replaces a tractor does not qualify. Amending taxes after filing Neither does a breeding or draft animal that replaces a dairy cow. Amending taxes after filing Soil or other environmental contamination. Amending taxes after filing   If, because of soil or other environmental contamination, it is not feasible for you to reinvest your insurance money or other proceeds from destroyed or damaged livestock in property similar or related in service or use to the livestock, you can treat other property (including real property) used for farming purposes, as property similar or related in service or use to the destroyed or damaged livestock. Amending taxes after filing Weather-related conditions. Amending taxes after filing   If, because of drought, flood, or other weather-related conditions, it is not feasible for you to reinvest the insurance money or other proceeds in property similar or related in service or use to the livestock, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the livestock you disposed of. Amending taxes after filing Example. Amending taxes after filing Each year you normally sell 25 cows from your beef herd. Amending taxes after filing However, this year you had to sell 50 cows. Amending taxes after filing This is because a severe drought significantly reduced the amount of hay and pasture yield needed to feed your herd for the rest of the year. Amending taxes after filing Because, as a result of the severe drought, it is not feasible for you to use the proceeds from selling the extra cows to buy new cows, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the cows you sold. Amending taxes after filing Standing crop destroyed by casualty. Amending taxes after filing   If a storm or other casualty destroyed your standing crop and you use the insurance money to acquire either another standing crop or a harvested crop, this purchase qualifies as replacement property. Amending taxes after filing The costs of planting and raising a new crop qualify as replacement costs for the destroyed crop only if you use the crop method of accounting (discussed in chapter 2). Amending taxes after filing In that case, the costs of bringing the new crop to the same level of maturity as the destroyed crop qualify as replacement costs to the extent they are incurred during the replacement period. Amending taxes after filing Timber loss. Amending taxes after filing   Standing timber you bought with the proceeds from the sale of timber downed as a result of a casualty, such as high winds, earthquakes, or volcanic eruptions, qualifies as replacement property. Amending taxes after filing If you bought the standing timber within the replacement period, you can postpone reporting the gain. Amending taxes after filing Business or income-producing property located in a federally declared disaster area. Amending taxes after filing   If your destroyed business or income-producing property was located in a federally declared disaster area, any tangible replacement property you acquire for use in any business is treated as similar or related in service or use to the destroyed property. Amending taxes after filing For more information, see Disaster Area Losses in Publication 547. Amending taxes after filing Substituting replacement property. Amending taxes after filing   Once you have acquired qualified replacement property that you designate as replacement property in a statement attached to your tax return, you cannot substitute other qualified replacement property. Amending taxes after filing This is true even if you acquire the other property within the replacement period. Amending taxes after filing However, if you discover that the original replacement property was not qualified replacement property, you can, within the replacement period, substitute the new qualified replacement property. Amending taxes after filing Basis of replacement property. Amending taxes after filing   You must reduce the basis of your replacement property (its cost) by the amount of postponed gain. Amending taxes after filing In this way, tax on the gain is postponed until you dispose of the replacement property. Amending taxes after filing Replacement Period To postpone reporting your gain, you must buy replacement property within a specified period of time. Amending taxes after filing This is the replacement period. Amending taxes after filing The replacement period begins on the date your property was damaged, destroyed, stolen, sold, or exchanged. Amending taxes after filing The replacement period generally ends 2 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. Amending taxes after filing Example. Amending taxes after filing You are a calendar year taxpayer. Amending taxes after filing While you were on vacation, farm equipment that cost $2,200 was stolen from your farm. Amending taxes after filing You discovered the theft when you returned to your farm on November 11, 2012. Amending taxes after filing Your insurance company investigated the theft and did not settle your claim until January 5, 2013, when they paid you $3,000. Amending taxes after filing You first realized a gain from the reimbursement for the theft during 2013, so you have until December 31, 2015, to replace the property. Amending taxes after filing Main home in disaster area. Amending taxes after filing   For your main home (or its contents) located in a federally declared disaster area, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. Amending taxes after filing See Disaster Area Losses , later. Amending taxes after filing Property in the Midwestern disaster areas. Amending taxes after filing   For property located in the Midwestern disaster areas (defined in Table 4 in the 2008 Publication 547) that was destroyed, damaged, stolen, or condemned, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Amending taxes after filing This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Midwestern disaster areas. Amending taxes after filing Property in the Kansas disaster area. Amending taxes after filing   For property located in the Kansas disaster area that was destroyed, damaged, stolen, or condemned after May 3, 2007, as a result of the Kansas storms and tornadoes, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Amending taxes after filing This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Kansas disaster area. Amending taxes after filing Property in the Hurricane Katrina disaster area. Amending taxes after filing   For property located in the Hurricane Katrina disaster area that was destroyed, damaged, stolen, or condemned after August 24, 2005, as a result of Hurricane Katrina, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. Amending taxes after filing This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. Amending taxes after filing Weather-related sales of livestock in an area eligible for federal assistance. Amending taxes after filing   For the sale or exchange of livestock due to drought, flood, or other weather-related conditions in an area eligible for federal assistance, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the sale or exchange. Amending taxes after filing The IRS may extend the replacement period on a regional basis if the weather-related conditions continue for longer than 3 years. Amending taxes after filing   For information on extensions of the replacement period because of persistent drought, see Notice 2006-82, 2006-39 I. Amending taxes after filing R. Amending taxes after filing B. Amending taxes after filing 529, available at  www. Amending taxes after filing irs. Amending taxes after filing gov/irb/2006-39_IRB/ar11. Amending taxes after filing html. Amending taxes after filing For a list of counties for which exceptional, extreme, or severe drought was reported during the 12 months ending August 31, 2013, see Notice 2013-62, available at IRS. Amending taxes after filing gov. Amending taxes after filing Condemnation. Amending taxes after filing   The replacement period for a condemnation begins on the earlier of the following dates. Amending taxes after filing The date on which you disposed of the condemned property. Amending taxes after filing The date on which the threat of condemnation began. Amending taxes after filing The replacement period generally ends 2 years after the close of the first tax year in which any part of the gain on the condemnation is realized. Amending taxes after filing But see Main home in disaster area , Property in the Midwestern disaster areas , Property in the Kansas disaster area , and Property in the Hurricane Katrina disaster area , earlier, for exceptions. Amending taxes after filing Business or investment real property. Amending taxes after filing   If real property held for use in a trade or business or for investment (not including property held primarily for sale) is condemned, the replacement period ends 3 years after the close of the first tax year in which any part of the gain on the condemnation is realized. Amending taxes after filing Extension. Amending taxes after filing   You can apply for an extension of the replacement period. Amending taxes after filing Send your written application to the Internal Revenue Service Center where you file your tax return. Amending taxes after filing See your tax return instructions for the address. Amending taxes after filing Include all the details about your need for an extension. Amending taxes after filing Make your application before the end of the replacement period. Amending taxes after filing However, you can file an application within a reasonable time after the replacement period ends if you can show a good reason for the delay. Amending taxes after filing You will get an extension of the replacement period if you can show reasonable cause for not making the replacement within the regular period. Amending taxes after filing How To Postpone Gain You postpone reporting your gain by reporting your choice on your tax return for the year you have the gain. Amending taxes after filing You have the gain in the year you receive insurance proceeds or other reimbursements that result in a gain. Amending taxes after filing Required statement. Amending taxes after filing   You should attach a statement to your return for the year you have the gain. Amending taxes after filing This statement should include all the following information. Amending taxes after filing The date and details of the casualty, theft, or other involuntary conversion. Amending taxes after filing The insurance or other reimbursement you received. Amending taxes after filing How you figured the gain. Amending taxes after filing Replacement property acquired before return filed. Amending taxes after filing   If you acquire replacement property before you file your return for the year you have the gain, your statement should also include detailed information about all the following items. Amending taxes after filing The replacement property. Amending taxes after filing The postponed gain. Amending taxes after filing The basis adjustment that reflects the postponed gain. Amending taxes after filing Any gain you are reporting as income. Amending taxes after filing Replacement property acquired after return filed. Amending taxes after filing   If you intend to buy replacement property after you file your return for the year you realize gain, your statement should also say that you are choosing to replace the property within the required replacement period. Amending taxes after filing   You should then attach another statement to your return for the year in which you buy the replacement property. Amending taxes after filing This statement should contain detailed information on the replacement property. Amending taxes after filing If you acquire part of your replacement property in one year and part in another year, you must attach a statement to each year's return. Amending taxes after filing Include in the statement detailed information on the replacement property bought in that year. Amending taxes after filing Reporting weather-related sales of livestock. Amending taxes after filing   If you choose to postpone reporting the gain on weather-related sales or exchanges of livestock, show all the following information on a statement attached to your return for the tax year in which you first realize any of the gain. Amending taxes after filing Evidence of the weather-related conditions that forced the sale or exchange of the livestock. Amending taxes after filing The gain realized on the sale or exchange. Amending taxes after filing The number and kind of livestock sold or exchanged. Amending taxes after filing The number of livestock of each kind you would have sold or exchanged under your usual business practice. Amending taxes after filing   Show all the following information and the preceding information on the return for the year in which you replace the livestock. Amending taxes after filing The dates you bought the replacement property. Amending taxes after filing The cost of the replacement property. Amending taxes after filing Description of the replacement property (for example, the number and kind of the replacement livestock). Amending taxes after filing Amended return. Amending taxes after filing   You must file an amended return (Form 1040X) for the tax year of the gain in either of the following situations. Amending taxes after filing You do not acquire replacement property within the replacement period, plus extensions. Amending taxes after filing On this amended return, you must report the gain and pay any additional tax due. Amending taxes after filing You acquire replacement property within the required replacement period, plus extensions, but at a cost less than the amount you receive from the casualty, theft, or other involuntary conversion. Amending taxes after filing On this amended return, you must report the part of the gain that cannot be postponed and pay any additional tax due. Amending taxes after filing Disaster Area Losses Special rules apply to federally declared disaster area losses. Amending taxes after filing A federally declared disaster is a disaster that occurred in an area declared by the President to be eligible for federal assistance under the Robert T. Amending taxes after filing Stafford Disaster Relief and Emergency Assistance Act. Amending taxes after filing It includes a major disaster or emergency declaration under the act. Amending taxes after filing A list of the areas warranting public or individual assistance (or both) under the Act is available at the Federal Emergency Management Agency (FEMA) web site at www. Amending taxes after filing fema. Amending taxes after filing gov. Amending taxes after filing This part discusses the special rules for when to deduct a disaster area loss and what tax deadlines may be postponed. Amending taxes after filing For other special rules, see Disaster Area Losses in Publication 547. Amending taxes after filing When to deduct the loss. Amending taxes after filing   You generally must deduct a casualty loss in the year it occurred. Amending taxes after filing However, if you have a deductible loss from a disaster that occurred in an area warranting public or individual assistance (or both), you can choose to deduct that loss on your return or amended return for the tax year immediately preceding the tax year in which the disaster happened. Amending taxes after filing If you make this choice, the loss is treated as having occurred in the preceding year. Amending taxes after filing    Claiming a qualifying disaster loss on the previous year's return may result in a lower tax for that year, often producing or increasing a cash refund. Amending taxes after filing   You must make the choice to take your casualty loss for the disaster in the preceding year by the later of the following dates. Amending taxes after filing The due date (without extensions) for filing your tax return for the tax year in which the disaster actually occurred. Amending taxes after filing The due date (with extensions) for the return for the preceding tax year. Amending taxes after filing Federal disaster relief grants. Amending taxes after filing   Do not include post-disaster relief grants received under the Robert T. Amending taxes after filing Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, or funeral expenses. Amending taxes after filing Do not deduct casualty losses or medical expenses to the extent they are specifically reimbursed by these disaster relief grants. Amending taxes after filing If the casualty loss was specifically reimbursed by the grant and you received the grant after the year in which you deducted the casualty loss, see Reimbursement received after deducting loss , earlier. Amending taxes after filing Unemployment assistance payments under the Act are taxable unemployment compensation. Amending taxes after filing Qualified disaster relief payments. Amending taxes after filing   Qualified disaster relief payments are not included in the income of individuals to the extent any expenses compensated by these payments are not otherwise compensated for by insurance or other reimbursement. Amending taxes after filing These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). Amending taxes after filing No withholding applies to these payments. Amending taxes after filing   Qualified disaster relief payments include payments you receive (regardless of the source) for the following expenses. Amending taxes after filing Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a federally declared disaster. Amending taxes after filing Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a federally declared disaster. Amending taxes after filing (A personal residence can be a rented residence or one you own. Amending taxes after filing ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a federally declared disaster. Amending taxes after filing   Qualified disaster relief payments include amounts paid by a federal, state, or local government in connection with a federally declared disaster to individuals affected by the disaster. Amending taxes after filing    Qualified disaster relief payments do not include: Payments for expenses otherwise paid for by insurance or other reimbursements, or Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation. Amending taxes after filing Qualified disaster mitigation payments. Amending taxes after filing   Qualified disaster mitigation payments made under the Robert T. Amending taxes after filing Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) are not included in income. Amending taxes after filing These are payments you, as a property owner, receive to reduce the risk of future damage to your property. Amending taxes after filing You cannot increase your basis in property, or take a deduction or credit, for expenditures made with respect to those payments. Amending taxes after filing Sale of property under hazard mitigation program. Amending taxes after filing   Generally, if you sell or otherwise transfer property, you must recognize any gain or loss for tax purposes unless the property is your main home. Amending taxes after filing You report the gain or deduct the loss on your tax return for the year you realize it. Amending taxes after filing (You cannot deduct a loss on personal-use property unless the loss resulted from a casualty, as discussed earlier. Amending taxes after filing ) However, if you sell or otherwise transfer property to the Federal Government, a state or local government, or an Indian tribal government under a hazard mitigation program, you can choose to postpone reporting the gain if you buy qualifying replacement property within a certain period of time. Amending taxes after filing See Postponing Gain , earlier, for the rules that apply. Amending taxes after filing Other federal assistance programs. Amending taxes after filing    For more information about other federal assistance programs, see Crop Insurance and Crop Disaster Payments and Feed Assistance and Payments in chapter 3 earlier. Amending taxes after filing Postponed tax deadlines. Amending taxes after filing   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. Amending taxes after filing The tax deadlines the IRS may postpone include those for filing income, excise, and employment tax returns, paying income, excise, and employment taxes, and making contributions to a traditional IRA or Roth IRA. Amending taxes after filing   If any tax deadline is postponed, the IRS will publicize the postponement in your area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). Amending taxes after filing Go to http://www. Amending taxes after filing irs. Amending taxes after filing gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. Amending taxes after filing Who is eligible. Amending taxes after filing   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Amending taxes after filing Any individual whose main home is located in a covered disaster area (defined next). Amending taxes after filing Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Amending taxes after filing Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered disaster area. Amending taxes after filing Any individual, business entity, or sole proprietorship whose records are needed to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. Amending taxes after filing The main home or principal place of business does not have to be located in the covered disaster area. Amending taxes after filing Any estate or trust that has tax records necessary to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. Amending taxes after filing The spouse on a joint return with a taxpayer who is eligible for postponements. Amending taxes after filing Any individual, business entity, or sole proprietorship not located in a covered disaster area, but whose necessary records to meet a postponed tax deadline are located in the covered disaster area. Amending taxes after filing Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. Amending taxes after filing Any other person determined by the IRS to be affected by a federally declared disaster. Amending taxes after filing Covered disaster area. Amending taxes after filing   This is an area of a federally declared disaster area in which the IRS has decided to postpone tax deadlines for up to 1 year. Amending taxes after filing Abatement of interest and penalties. Amending taxes after filing   The IRS may abate the interest and penalties on the underpaid income tax for the length of any postponement of tax deadlines. Amending taxes after filing Reporting Gains and Losses You will have to file one or more of the following forms to report your gains or losses from involuntary conversions. Amending taxes after filing Form 4684. Amending taxes after filing   Use this form to report your gains and losses from casualties and thefts. Amending taxes after filing Form 4797. Amending taxes after filing   Use this form to report involuntary conversions (other than from casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business or a transaction entered into for profit. Amending taxes after filing Also use this form if you have a gain from a casualty or theft on trade, business or income-producing property held for more than 1 year and you have to recapture some or all of your gain as ordinary income. Amending taxes after filing Form 8949. Amending taxes after filing   Use this form to report gain from an involuntary conversion (other than from casualty or theft) of personal-use property. Amending taxes after filing Schedule A (Form 1040). Amending taxes after filing   Use this form to deduct your losses from casualties and thefts of personal-use property and income-producing property, that you reported on Form 4684. Amending taxes after filing Schedule D (Form 1040). Amending taxes after filing   Use this form to carry over the following gains. Amending taxes after filing Net gain shown on Form 4797 from an involuntary conversion of business property held for more than 1 year. Amending taxes after filing Net gain shown on Form 4684 from the casualty or theft of personal-use property. Amending taxes after filing    Also use this form to figure the overall gain or loss from transactions reported on Form 8949. Amending taxes after filing Schedule F (Form 1040). Amending taxes after filing   Use this form to deduct your losses from casualty or theft of livestock or produce bought for sale under Other expenses in Part II, line 32, if you use the cash method of accounting and have not otherwise deducted these losses. Amending taxes after filing Prev  Up  Next   Home   More Online Publications