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Irs Form 1040ez 2010

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Irs Form 1040ez 2010

Irs form 1040ez 2010 20. Irs form 1040ez 2010   Standard Deduction Table of Contents What's New Introduction Standard Deduction Amount Standard Deduction for Dependents Who Should ItemizeWhen to itemize. Irs form 1040ez 2010 Married persons who filed separate returns. Irs form 1040ez 2010 What's New Standard deduction increased. Irs form 1040ez 2010  The standard deduction for some taxpayers who do not itemize their deductions on Schedule A (Form 1040) is higher for 2013 than it was for 2012. Irs form 1040ez 2010 The amount depends on your filing status. Irs form 1040ez 2010 You can use the 2013 Standard Deduction Tables in this chapter to figure your standard deduction. Irs form 1040ez 2010 Introduction This chapter discusses the following topics. Irs form 1040ez 2010 How to figure the amount of your standard deduction. Irs form 1040ez 2010 The standard deduction for dependents. Irs form 1040ez 2010 Who should itemize deductions. Irs form 1040ez 2010 Most taxpayers have a choice of either taking a standard deduction or itemizing their deductions. Irs form 1040ez 2010 If you have a choice, you can use the method that gives you the lower tax. Irs form 1040ez 2010 The standard deduction is a dollar amount that reduces your taxable income. Irs form 1040ez 2010 It is a benefit that eliminates the need for many taxpayers to itemize actual deductions, such as medical expenses, charitable contributions, and taxes, on Schedule A (Form 1040). Irs form 1040ez 2010 The standard deduction is higher for taxpayers who: Are 65 or older, or Are blind. Irs form 1040ez 2010 You benefit from the standard deduction if your standard deduction is more than the total of your allowable itemized deductions. Irs form 1040ez 2010 Persons not eligible for the standard deduction. Irs form 1040ez 2010   Your standard deduction is zero and you should itemize any deductions you have if: Your filing status is married filing separately, and your spouse itemizes deductions on his or her return, You are filing a tax return for a short tax year because of a change in your annual accounting period, or You are a nonresident or dual-status alien during the year. Irs form 1040ez 2010 You are considered a dual-status alien if you were both a nonresident and resident alien during the year. Irs form 1040ez 2010 Note. Irs form 1040ez 2010 If you are a nonresident alien who is married to a U. Irs form 1040ez 2010 S. Irs form 1040ez 2010 citizen or resident alien at the end of the year, you can choose to be treated as a U. Irs form 1040ez 2010 S. Irs form 1040ez 2010 resident. Irs form 1040ez 2010 (See Publication 519, U. Irs form 1040ez 2010 S. Irs form 1040ez 2010 Tax Guide for Aliens. Irs form 1040ez 2010 ) If you make this choice, you can take the standard deduction. Irs form 1040ez 2010 If an exemption for you can be claimed on another person's return (such as your parents' return), your standard deduction may be limited. Irs form 1040ez 2010 See Standard Deduction for Dependents, later. Irs form 1040ez 2010 Standard Deduction Amount The standard deduction amount depends on your filing status, whether you are 65 or older or blind, and whether an exemption can be claimed for you by another taxpayer. Irs form 1040ez 2010 Generally, the standard deduction amounts are adjusted each year for inflation. Irs form 1040ez 2010 The standard deduction amounts for most people are shown in Table 20-1. Irs form 1040ez 2010 Decedent's final return. Irs form 1040ez 2010   The standard deduction for a decedent's final tax return is the same as it would have been had the decedent continued to live. Irs form 1040ez 2010 However, if the decedent was not 65 or older at the time of death, the higher standard deduction for age cannot be claimed. Irs form 1040ez 2010 Higher Standard Deduction for Age (65 or Older) If you are age 65 or older on the last day of the year and do not itemize deductions, you are entitled to a higher standard deduction. Irs form 1040ez 2010 You are considered 65 on the day before your 65th birthday. Irs form 1040ez 2010 Therefore, you can take a higher standard deduction for 2013 if you were born before January 2, 1949. Irs form 1040ez 2010 Use Table 20-2 to figure the standard deduction amount. Irs form 1040ez 2010 Higher Standard Deduction for Blindness If you are blind on the last day of the year and you do not itemize deductions, you are entitled to a higher standard deduction. Irs form 1040ez 2010 Not totally blind. Irs form 1040ez 2010   If you are not totally blind, you must get a certified statement from an eye doctor (ophthalmologist or optometrist) that: You cannot see better than 20/200 in the better eye with glasses or contact lenses, or Your field of vision is 20 degrees or less. Irs form 1040ez 2010   If your eye condition is not likely to improve beyond these limits, the statement should include this fact. Irs form 1040ez 2010 You must keep the statement in your records. Irs form 1040ez 2010   If your vision can be corrected beyond these limits only by contact lenses that you can wear only briefly because of pain, infection, or ulcers, you can take the higher standard deduction for blindness if you otherwise qualify. Irs form 1040ez 2010 Spouse 65 or Older or Blind You can take the higher standard deduction if your spouse is age 65 or older or blind and: You file a joint return, or You file a separate return and can claim an exemption for your spouse because your spouse had no gross income and cannot be claimed as a dependent by another taxpayer. Irs form 1040ez 2010 You cannot claim the higher standard deduction for an individual other than yourself and your spouse. Irs form 1040ez 2010 Examples The following examples illustrate how to determine your standard deduction using Tables 20-1 and 20-2. Irs form 1040ez 2010 Example 1. Irs form 1040ez 2010 Larry, 46, and Donna, 33, are filing a joint return for 2013. Irs form 1040ez 2010 Neither is blind, and neither can be claimed as a dependent. Irs form 1040ez 2010 They decide not to itemize their deductions. Irs form 1040ez 2010 They use Table 20-1. Irs form 1040ez 2010 Their standard deduction is $12,200. Irs form 1040ez 2010 Example 2. Irs form 1040ez 2010 The facts are the same as in Example 1 except that Larry is blind at the end of 2013. Irs form 1040ez 2010 Larry and Donna use Table 20-2. Irs form 1040ez 2010 Their standard deduction is $13,400. Irs form 1040ez 2010 Example 3. Irs form 1040ez 2010 Bill and Lisa are filing a joint return for 2013. Irs form 1040ez 2010 Both are over age 65. Irs form 1040ez 2010 Neither is blind, and neither can be claimed as a dependent. Irs form 1040ez 2010 If they do not itemize deductions, they use Table 20-2. Irs form 1040ez 2010 Their standard deduction is $14,600. Irs form 1040ez 2010 Standard Deduction for Dependents The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to the greater of: $1,000, or The individual's earned income for the year plus $350 (but not more than the regular standard deduction amount, generally $6,100). Irs form 1040ez 2010 However, if the individual is 65 or older or blind, the standard deduction may be higher. Irs form 1040ez 2010 If you (or your spouse, if filing jointly) can be claimed as a dependent on someone else's return, use Table 20-3 to determine your standard deduction. Irs form 1040ez 2010 Earned income defined. Irs form 1040ez 2010   Earned income is salaries, wages, tips, professional fees, and other amounts received as pay for work you actually perform. Irs form 1040ez 2010    For purposes of the standard deduction, earned income also includes any part of a scholarship or fellowship grant that you must include in your gross income. Irs form 1040ez 2010 See Scholarships and fellowships in chapter 12 for more information on what qualifies as a scholarship or fellowship grant. Irs form 1040ez 2010 Example 1. Irs form 1040ez 2010 Michael is single. Irs form 1040ez 2010 His parents can claim an exemption for him on their 2013 tax return. Irs form 1040ez 2010 He has interest income of $780 and wages of $150. Irs form 1040ez 2010 He has no itemized deductions. Irs form 1040ez 2010 Michael uses Table 20-3 to find his standard deduction. Irs form 1040ez 2010 He enters $150 (his earned income) on line 1, $500 ($150 + $350) on line 3, $1,000 (the larger of $500 and $1,000) on line 5, and $6,100 on line 6. Irs form 1040ez 2010 His standard deduction, on line 7a, is $1,000 (the smaller of $1,000 and $6,100). Irs form 1040ez 2010 Example 2. Irs form 1040ez 2010 Joe, a 22-year-old full-time college student, can be claimed as a dependent on his parents' 2013 tax return. Irs form 1040ez 2010 Joe is married and files a separate return. Irs form 1040ez 2010 His wife does not itemize deductions on her separate return. Irs form 1040ez 2010 Joe has $1,500 in interest income and wages of $3,800. Irs form 1040ez 2010 He has no itemized deductions. Irs form 1040ez 2010 Joe finds his standard deduction by using Table 20-3. Irs form 1040ez 2010 He enters his earned income, $3,800 on line 1. Irs form 1040ez 2010 He adds lines 1 and 2 and enters $4,150 on line 3. Irs form 1040ez 2010 On line 5, he enters $4,150, the larger of lines 3 and 4. Irs form 1040ez 2010 Because Joe is married filing a separate return, he enters $6,100 on line 6. Irs form 1040ez 2010 On line 7a he enters $4,150 as his standard deduction because it is smaller than $6,100, the amount on line 6. Irs form 1040ez 2010 Example 3. Irs form 1040ez 2010 Amy, who is single, can be claimed as a dependent on her parents' 2013 tax return. Irs form 1040ez 2010 She is 18 years old and blind. Irs form 1040ez 2010 She has interest income of $1,300 and wages of $2,900. Irs form 1040ez 2010 She has no itemized deductions. Irs form 1040ez 2010 Amy uses Table 20-3 to find her standard deduction. Irs form 1040ez 2010 She enters her wages of $2,900 on line 1. Irs form 1040ez 2010 She adds lines 1 and 2 and enters $3,250 on line 3. Irs form 1040ez 2010 On line 5, she enters $3,250, the larger of lines 3 and 4. Irs form 1040ez 2010 Because she is single, Amy enters $6,100 on line 6. Irs form 1040ez 2010 She enters $3,250 on line 7a. Irs form 1040ez 2010 This is the smaller of the amounts on lines 5 and 6. Irs form 1040ez 2010 Because she checked one box in the top part of the worksheet, she enters $1,500 on line 7b. Irs form 1040ez 2010 She then adds the amounts on lines 7a and 7b and enters her standard deduction of $4,750 on line 7c. Irs form 1040ez 2010 Example 4. Irs form 1040ez 2010 Ed is single. Irs form 1040ez 2010 His parents can claim an exemption for him on their 2013 tax return. Irs form 1040ez 2010 He has wages of $7,000, interest income of $500, and a business loss of $3,000. Irs form 1040ez 2010 He has no itemized deductions. Irs form 1040ez 2010 Ed uses Table 20-3 to figure his standard deduction. Irs form 1040ez 2010 He enters $4,000 ($7,000 - $3,000) on line 1. Irs form 1040ez 2010 He adds lines 1 and 2 and enters $4,350 on line 3. Irs form 1040ez 2010 On line 5 he enters $4,350, the larger of lines 3 and 4. Irs form 1040ez 2010 Because he is single, Ed enters $6,100 on line 6. Irs form 1040ez 2010 On line 7a he enters $4,350 as his standard deduction because it is smaller than $6,100, the amount on line 6. Irs form 1040ez 2010 Who Should Itemize You should itemize deductions if your total deductions are more than the standard deduction amount. Irs form 1040ez 2010 Also, you should itemize if you do not qualify for the standard deduction, as discussed earlier under Persons not eligible for the standard deduction . Irs form 1040ez 2010 You should first figure your itemized deductions and compare that amount to your standard deduction to make sure you are using the method that gives you the greater benefit. Irs form 1040ez 2010 You may be subject to a limit on some of your itemized deductions if your adjusted gross income is more than: $250,000 if single ($275,000 if head of household, $300,000 if married filing jointly or qualifying widow(er); or $150,000 if married filing separately). Irs form 1040ez 2010 See chapter 29 or the instructions for Schedule A (Form 1040) for more information on figuring the correct amount of your itemized deductions. Irs form 1040ez 2010 When to itemize. Irs form 1040ez 2010   You may benefit from itemizing your deductions on Schedule A (Form 1040) if you: Do not qualify for the standard deduction, or the amount you can claim is limited, Had large uninsured medical and dental expenses during the year, Paid interest and taxes on your home, Had large unreimbursed employee business expenses or other miscellaneous deductions, Had large uninsured casualty or theft losses, Made large contributions to qualified charities, or Have total itemized deductions that are more than the standard deduction to which you otherwise are entitled. Irs form 1040ez 2010 These deductions are explained in chapters 21–28. Irs form 1040ez 2010    If you decide to itemize your deductions, complete Schedule A and attach it to your Form 1040. Irs form 1040ez 2010 Enter the amount from Schedule A, line 29, on Form 1040, line 40. Irs form 1040ez 2010 Electing to itemize for state tax or other purposes. Irs form 1040ez 2010   Even if your itemized deductions are less than your standard deduction, you can elect to itemize deductions on your federal return rather than take the standard deduction. Irs form 1040ez 2010 You may want to do this if, for example, the tax benefit of itemizing your deductions on your state tax return is greater than the tax benefit you lose on your federal return by not taking the standard deduction. Irs form 1040ez 2010 To make this election, you must check the box on line 30 of Schedule A. Irs form 1040ez 2010 Changing your mind. Irs form 1040ez 2010   If you do not itemize your deductions and later find that you should have itemized — or if you itemize your deductions and later find you should not have — you can change your return by filing Form 1040X, Amended U. Irs form 1040ez 2010 S. Irs form 1040ez 2010 Individual Income Tax Return. Irs form 1040ez 2010 See Amended Returns and Claims for Refund in chapter 1 for more information on amended returns. Irs form 1040ez 2010 Married persons who filed separate returns. Irs form 1040ez 2010   You can change methods of taking deductions only if you and your spouse both make the same changes. Irs form 1040ez 2010 Both of you must file a consent to assessment for any additional tax either one may owe as a result of the change. Irs form 1040ez 2010    You and your spouse can use the method that gives you the lower total tax, even though one of you may pay more tax than you would have paid by using the other method. Irs form 1040ez 2010 You both must use the same method of claiming deductions. Irs form 1040ez 2010 If one itemizes deductions, the other should itemize because he or she will not qualify for the standard deduction. Irs form 1040ez 2010 See Persons not eligible for the standard deduction , earlier. Irs form 1040ez 2010 2013 Standard Deduction Tables If you are married filing a separate return and your spouse itemizes deductions, or if you are a dual-status alien, you cannot take the standard deduction even if you were born before January 2, 1949, or are blind. Irs form 1040ez 2010 Table 20-1. Irs form 1040ez 2010 Standard Deduction Chart for Most People* If your filing status is. Irs form 1040ez 2010 . Irs form 1040ez 2010 . Irs form 1040ez 2010 Your standard deduction is: Single or Married filing separately $6,100 Married filing jointly or Qualifying widow(er) with dependent child 12,200 Head of household 8,950 *Do not use this chart if you were born before January 2, 1949, are blind, or if someone else can claim you (or your spouse if filing jointly) as a dependent. Irs form 1040ez 2010 Use Table 20-2 or 20-3 instead. Irs form 1040ez 2010 Table 20-2. Irs form 1040ez 2010 Standard Deduction Chart for People Born Before January 2, 1949, or Who are Blind Check the correct number of boxes below. Irs form 1040ez 2010 Then go to the chart. Irs form 1040ez 2010 You: Born before January 2, 1949 □ Blind □ Your spouse, if claiming spouse's exemption: Born before January 2, 1949 □ Blind □ Total number of boxes checked   IF  your filing status is. Irs form 1040ez 2010 . Irs form 1040ez 2010 . Irs form 1040ez 2010 AND the number in the box above is. Irs form 1040ez 2010 . Irs form 1040ez 2010 . Irs form 1040ez 2010 THEN your standard deduction is. Irs form 1040ez 2010 . Irs form 1040ez 2010 . Irs form 1040ez 2010 Single 1 $7,600   2 9,100 Married filing jointly 1 $13,400 or Qualifying 2 14,600 widow(er) with 3 15,800 dependent child 4 17,000 Married filing 1 $7,300 separately 2 8,500   3 9,700   4 10,900 Head of household 1 $10,450   2 11,950 *If someone else can claim you (or your spouse if filing jointly) as a dependent, use Table 20-3 instead. Irs form 1040ez 2010 Table 20-3. Irs form 1040ez 2010 Standard Deduction Worksheet for Dependents Use this worksheet only if someone else can claim you (or your spouse if filing jointly) as a dependent. Irs form 1040ez 2010 Check the correct number of boxes below. Irs form 1040ez 2010 Then go to the worksheet. Irs form 1040ez 2010 You:   Born before January 2, 1949 □ Blind □ Your spouse, if claiming spouse's exemption: Born before January 2, 1949 □ Blind □ Total number of boxes checked 1. Irs form 1040ez 2010 Enter your earned income (defined below). Irs form 1040ez 2010 If none, enter -0-. Irs form 1040ez 2010 1. Irs form 1040ez 2010   2. Irs form 1040ez 2010 Additional amount. Irs form 1040ez 2010 2. Irs form 1040ez 2010 $350 3. Irs form 1040ez 2010 Add lines 1 and 2. Irs form 1040ez 2010 3. Irs form 1040ez 2010   4. Irs form 1040ez 2010 Minimum standard deduction. Irs form 1040ez 2010 4. Irs form 1040ez 2010 $1,000 5. Irs form 1040ez 2010 Enter the larger of line 3 or line 4. Irs form 1040ez 2010 5. Irs form 1040ez 2010   6. Irs form 1040ez 2010 Enter the amount shown below for your filing status. Irs form 1040ez 2010 Single or Married filing separately—$6,100 Married filing jointly—$12,200 Head of household—$8,950 6. Irs form 1040ez 2010   7. Irs form 1040ez 2010 Standard deduction. Irs form 1040ez 2010         a. Irs form 1040ez 2010 Enter the smaller of line 5 or line 6. Irs form 1040ez 2010 If born after January 1, 1949, and not blind, stop here. Irs form 1040ez 2010 This is your standard deduction. Irs form 1040ez 2010 Otherwise, go on to line 7b. Irs form 1040ez 2010 7a. Irs form 1040ez 2010     b. Irs form 1040ez 2010 If born before January 2, 1949, or blind, multiply $1,500 ($1,200 if married) by the number in the box above. Irs form 1040ez 2010 7b. Irs form 1040ez 2010     c. Irs form 1040ez 2010 Add lines 7a and 7b. Irs form 1040ez 2010 This is your standard deduction for 2013. Irs form 1040ez 2010 7c. Irs form 1040ez 2010   Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. Irs form 1040ez 2010 It also includes any amount received as a scholarship that you must include in your income. Irs form 1040ez 2010 Prev  Up  Next   Home   More Online Publications
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The Irs Form 1040ez 2010

Irs form 1040ez 2010 Publication 547 - Main Content Table of Contents CasualtyFamily pet. Irs form 1040ez 2010 Progressive deterioration. Irs form 1040ez 2010 Special Procedure for Damage From Corrosive Drywall Theft Loss on Deposits Proof of Loss Figuring a LossGain from reimbursement. Irs form 1040ez 2010 Business or income-producing property. Irs form 1040ez 2010 Loss of inventory. Irs form 1040ez 2010 Leased property. Irs form 1040ez 2010 Exception for personal-use real property. Irs form 1040ez 2010 Decrease in Fair Market Value Adjusted Basis Insurance and Other Reimbursements Deduction Limits2% Rule $100 Rule 10% Rule Figuring the Deduction Figuring a GainPostponement of Gain When To Report Gains and LossesLoss on deposits. Irs form 1040ez 2010 Lessee's loss. Irs form 1040ez 2010 Disaster Area LossesDisaster loss to inventory. Irs form 1040ez 2010 Main home in disaster area. Irs form 1040ez 2010 Unsafe home. Irs form 1040ez 2010 Time limit for making choice. Irs form 1040ez 2010 Revoking your choice. Irs form 1040ez 2010 Figuring the loss deduction. Irs form 1040ez 2010 How to report the loss on Form 1040X. Irs form 1040ez 2010 Records. Irs form 1040ez 2010 Need a copy of your tax return for the preceding year? Postponed Tax Deadlines Contacting the Federal Emergency Management Agency (FEMA) How To Report Gains and LossesProperty held 1 year or less. Irs form 1040ez 2010 Property held more than 1 year. Irs form 1040ez 2010 Depreciable property. Irs form 1040ez 2010 Adjustments to Basis If Deductions Are More Than Income How To Get Tax HelpLow Income Taxpayer Clinics Casualty A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Irs form 1040ez 2010 A sudden event is one that is swift, not gradual or progressive. Irs form 1040ez 2010 An unexpected event is one that is ordinarily unanticipated and unintended. Irs form 1040ez 2010 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. Irs form 1040ez 2010 Generally, casualty losses are deductible during the taxable year that the loss occurred. Irs form 1040ez 2010 See Table 3, later. Irs form 1040ez 2010 Deductible losses. Irs form 1040ez 2010   Deductible casualty losses can result from a number of different causes, including the following. Irs form 1040ez 2010 Car accidents (but see Nondeductible losses , next, for exceptions). Irs form 1040ez 2010 Earthquakes. Irs form 1040ez 2010 Fires (but see Nondeductible losses , next, for exceptions). Irs form 1040ez 2010 Floods. Irs form 1040ez 2010 Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster as discussed under Disaster Area Losses , later. Irs form 1040ez 2010 Mine cave-ins. Irs form 1040ez 2010 Shipwrecks. Irs form 1040ez 2010 Sonic booms. Irs form 1040ez 2010 Storms, including hurricanes and tornadoes. Irs form 1040ez 2010 Terrorist attacks. Irs form 1040ez 2010 Vandalism. Irs form 1040ez 2010 Volcanic eruptions. Irs form 1040ez 2010 Nondeductible losses. Irs form 1040ez 2010   A casualty loss is not deductible if the damage or destruction is caused by the following. Irs form 1040ez 2010 Accidentally breaking articles such as glassware or china under normal conditions. Irs form 1040ez 2010 A family pet (explained below). Irs form 1040ez 2010 A fire if you willfully set it, or pay someone else to set it. Irs form 1040ez 2010 A car accident if your willful negligence or willful act caused it. Irs form 1040ez 2010 The same is true if the willful act or willful negligence of someone acting for you caused the accident. Irs form 1040ez 2010 Progressive deterioration (explained below). Irs form 1040ez 2010 However, see Special Procedure for Damage From Corrosive Drywall , later. Irs form 1040ez 2010 Family pet. Irs form 1040ez 2010   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed earlier under Casualty are met. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 Your antique oriental rug was damaged by your new puppy before it was housebroken. Irs form 1040ez 2010 Because the damage was not unexpected and unusual, the loss is not deductible as a casualty loss. Irs form 1040ez 2010 Progressive deterioration. Irs form 1040ez 2010   Loss of property due to progressive deterioration is not deductible as a casualty loss. Irs form 1040ez 2010 This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Irs form 1040ez 2010 The following are examples of damage due to progressive deterioration. Irs form 1040ez 2010 The steady weakening of a building due to normal wind and weather conditions. Irs form 1040ez 2010 The deterioration and damage to a water heater that bursts. Irs form 1040ez 2010 However, the rust and water damage to rugs and drapes caused by the bursting of a water heater does qualify as a casualty. Irs form 1040ez 2010 Most losses of property caused by droughts. Irs form 1040ez 2010 To be deductible, a drought-related loss generally must be incurred in a trade or business or in a transaction entered into for profit. Irs form 1040ez 2010 Termite or moth damage. Irs form 1040ez 2010 The damage or destruction of trees, shrubs, or other plants by a fungus, disease, insects, worms, or similar pests. Irs form 1040ez 2010 However, a sudden destruction due to an unexpected or unusual infestation of beetles or other insects may result in a casualty loss. Irs form 1040ez 2010 Special Procedure for Damage From Corrosive Drywall Under a special procedure, you can deduct the amounts you paid to repair damage to your home and household appliances due to corrosive drywall. Irs form 1040ez 2010 Under this procedure, you treat the amounts paid for repairs as a casualty loss in the year of payment. Irs form 1040ez 2010 For example, amounts you paid for repairs in 2013 are deductible on your 2013 tax return and amounts you paid for repairs in 2012 are deductible on your 2012 tax return. Irs form 1040ez 2010 Note. Irs form 1040ez 2010 If you paid for any repairs before 2013 and you choose to follow this special procedure, you can amend your return for the earlier year by filing Form 1040X, Amended U. Irs form 1040ez 2010 S. Irs form 1040ez 2010 Individual Income Tax Return, and attaching a completed Form 4684 for the appropriate year. Irs form 1040ez 2010 Form 4684 for the appropriate year can be found at IRS. Irs form 1040ez 2010 gov. Irs form 1040ez 2010 Generally, Form 1040X must be filed within 3 years after the date the original return was filed or within 2 years after the date the tax was paid, whichever is later. Irs form 1040ez 2010 Corrosive drywall. Irs form 1040ez 2010   For purposes of this special procedure, “corrosive drywall” means drywall that is identified as problem drywall under the two-step identification method published by the Consumer Product Safety Commission (CPSC) and the Department of Housing and Urban Development (HUD) in their interim guidance dated January 28, 2010, as revised by the CPSC and HUD. Irs form 1040ez 2010 The revised identification guidance and remediation guidelines are available at www. Irs form 1040ez 2010 cpsc. Irs form 1040ez 2010 gov/Safety-Education/Safety-Education-Centers/Drywall. Irs form 1040ez 2010 Special instructions for completing Form 4684. Irs form 1040ez 2010   If you choose to follow this special procedure, complete Form 4684, Section A, according to the instructions below. Irs form 1040ez 2010 The IRS will not challenge your treatment of damage resulting from corrosive drywall as a casualty loss if you determine and report the loss as explained below. Irs form 1040ez 2010 Top margin of Form 4684. Irs form 1040ez 2010   Enter “Revenue Procedure 2010-36”. Irs form 1040ez 2010 Line 1. Irs form 1040ez 2010   Enter the information required by the line 1 instructions. Irs form 1040ez 2010 Line 2. Irs form 1040ez 2010   Skip this line. Irs form 1040ez 2010 Line 3. Irs form 1040ez 2010   Enter the amount of insurance or other reimbursements you received (including through litigation). Irs form 1040ez 2010 If none, enter -0-. Irs form 1040ez 2010 Lines 4–7. Irs form 1040ez 2010   Skip these lines. Irs form 1040ez 2010 Line 8. Irs form 1040ez 2010   Enter the amount you paid to repair the damage to your home and household appliances due to corrosive drywall. Irs form 1040ez 2010 Enter only the amounts you paid to restore your home to the condition existing immediately before the damage. Irs form 1040ez 2010 Do not enter any amounts you paid for improvements or additions that increased the value of your home above its pre-loss value. Irs form 1040ez 2010 If you replaced a household appliance instead of repairing it, enter the lesser of: The current cost to replace the original appliance, or The basis of the original appliance (generally its cost). Irs form 1040ez 2010 Line 9. Irs form 1040ez 2010   If line 8 is more than line 3, do one of the following. Irs form 1040ez 2010 If you have a pending claim for reimbursement (or you intend to pursue reimbursement), enter 75% of the difference between lines 3 and 8. Irs form 1040ez 2010 If item (1) does not apply to you, enter the full amount of the difference between lines 3 and 8. Irs form 1040ez 2010 If line 8 is less than or equal to line 3, you cannot claim a casualty loss deduction using this special procedure. Irs form 1040ez 2010    If you have a pending claim for reimbursement (or you intend to pursue reimbursement), you may have income or an additional deduction in a later tax year depending on the actual amount of reimbursement received. Irs form 1040ez 2010 See Reimbursement Received After Deducting Loss, later. Irs form 1040ez 2010 Lines 10–18. Irs form 1040ez 2010   Complete these lines according to the Instructions for Form 4684. Irs form 1040ez 2010 Choosing not to follow this special procedure. Irs form 1040ez 2010   If you choose not to follow this special procedure, you are subject to all of the provisions that apply to the deductibility of casualty losses, and you must complete lines 1–9 according to the Instructions for Form 4684. Irs form 1040ez 2010 This means, for example, that you must establish that the damage, destruction, or loss of property resulted from an identifiable event as defined earlier under Casualty . Irs form 1040ez 2010 Furthermore, you must have proof that shows the following. Irs form 1040ez 2010 The loss is properly deductible in the tax year you claimed it and not in some other year. Irs form 1040ez 2010 See When To Report Gains and Losses , later. Irs form 1040ez 2010 The amount of the claimed loss. Irs form 1040ez 2010 See Proof of Loss , later. Irs form 1040ez 2010 No claim for reimbursement of any portion of the loss exists for which there is a reasonable prospect of recovery. Irs form 1040ez 2010 See When To Report Gains and Losses , later. Irs form 1040ez 2010 Theft A theft is the taking and removing of money or property with the intent to deprive the owner of it. Irs form 1040ez 2010 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. Irs form 1040ez 2010 You do not need to show a conviction for theft. Irs form 1040ez 2010 Theft includes the taking of money or property by the following means. Irs form 1040ez 2010 Blackmail. Irs form 1040ez 2010 Burglary. Irs form 1040ez 2010 Embezzlement. Irs form 1040ez 2010 Extortion. Irs form 1040ez 2010 Kidnapping for ransom. Irs form 1040ez 2010 Larceny. Irs form 1040ez 2010 Robbery. Irs form 1040ez 2010 The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Irs form 1040ez 2010 Decline in market value of stock. Irs form 1040ez 2010   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. Irs form 1040ez 2010 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. Irs form 1040ez 2010 You report a capital loss on Schedule D (Form 1040). Irs form 1040ez 2010 For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Irs form 1040ez 2010 Mislaid or lost property. Irs form 1040ez 2010    The simple disappearance of money or property is not a theft. Irs form 1040ez 2010 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. Irs form 1040ez 2010 Sudden, unexpected, and unusual events were defined earlier under Casualty . Irs form 1040ez 2010 Example. Irs form 1040ez 2010 A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Irs form 1040ez 2010 The diamond falls from the ring and is never found. Irs form 1040ez 2010 The loss of the diamond is a casualty. Irs form 1040ez 2010 Losses from Ponzi-type investment schemes. Irs form 1040ez 2010   The IRS has issued the following guidance to assist taxpayers who are victims of losses from Ponzi-type investment schemes: Revenue Ruling 2009-9, 2009-14 I. Irs form 1040ez 2010 R. Irs form 1040ez 2010 B. Irs form 1040ez 2010 735 (available at www. Irs form 1040ez 2010 irs. Irs form 1040ez 2010 gov/irb/2009-14_IRB/ar07. Irs form 1040ez 2010 html). Irs form 1040ez 2010 Revenue Procedure 2009-20, 2009-14 I. Irs form 1040ez 2010 R. Irs form 1040ez 2010 B. Irs form 1040ez 2010 749 (available at www. Irs form 1040ez 2010 irs. Irs form 1040ez 2010 gov/irb/2009-14_IRB/ar11. Irs form 1040ez 2010 html). Irs form 1040ez 2010 Revenue Procedure 2011-58, 2011-50 I. Irs form 1040ez 2010 R. Irs form 1040ez 2010 B. Irs form 1040ez 2010 847 (available at www. Irs form 1040ez 2010 irs. Irs form 1040ez 2010 gov/irb/2011-50_IRB/ar11. Irs form 1040ez 2010 html). Irs form 1040ez 2010 If you qualify to use Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58, and you choose to follow the procedures in the guidance, first fill out Section C of Form 4684 to determine the amount to enter on Section B, line 28. Irs form 1040ez 2010 Skip lines 19 to 27, but you must fill out Section B, lines 29 to 39, as appropriate. Irs form 1040ez 2010 Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. Irs form 1040ez 2010 You do not need to complete Appendix A. Irs form 1040ez 2010 For more information, see the above revenue ruling and revenue procedures, and the Instructions for Form 4684. Irs form 1040ez 2010   If you choose not to use the procedures in Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58, you may claim your theft loss by filling out Section B, lines 19 to 39, as appropriate. Irs form 1040ez 2010 Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. Irs form 1040ez 2010 If you incurred this type of loss, you can choose one of the following ways to deduct the loss. Irs form 1040ez 2010 As a casualty loss. Irs form 1040ez 2010 As an ordinary loss. Irs form 1040ez 2010 As a nonbusiness bad debt. Irs form 1040ez 2010 Casualty loss or ordinary loss. Irs form 1040ez 2010   You can choose to deduct a loss on deposits as a casualty loss or as an ordinary loss for any year in which you can reasonably estimate how much of your deposits you have lost in an insolvent or bankrupt financial institution. Irs form 1040ez 2010 The choice generally is made on the return you file for that year and applies to all your losses on deposits for the year in that particular financial institution. Irs form 1040ez 2010 If you treat the loss as a casualty or ordinary loss, you cannot treat the same amount of the loss as a nonbusiness bad debt when it actually becomes worthless. Irs form 1040ez 2010 However, you can take a nonbusiness bad debt deduction for any amount of loss that is more than the estimated amount you deducted as a casualty or ordinary loss. Irs form 1040ez 2010 Once you make the choice, you cannot change it without permission from the Internal Revenue Service. Irs form 1040ez 2010   If you claim an ordinary loss, report it as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Irs form 1040ez 2010 The maximum amount you can claim is $20,000 ($10,000 if you are married filing separately) reduced by any expected state insurance proceeds. Irs form 1040ez 2010 Your loss is subject to the 2%-of-adjusted-gross-income limit. Irs form 1040ez 2010 You cannot choose to claim an ordinary loss if any part of the deposit is federally insured. Irs form 1040ez 2010 Nonbusiness bad debt. Irs form 1040ez 2010   If you do not choose to deduct the loss as a casualty loss or as an ordinary loss, you must wait until the year the actual loss is determined and deduct the loss as a nonbusiness bad debt in that year. Irs form 1040ez 2010 How to report. Irs form 1040ez 2010   The kind of deduction you choose for your loss on deposits determines how you report your loss. Irs form 1040ez 2010 See Table 1. Irs form 1040ez 2010 More information. Irs form 1040ez 2010   For more information, see Special Treatment for Losses on Deposits in Insolvent or Bankrupt Financial Institutions in the Instructions for Form 4684. Irs form 1040ez 2010 Deducted loss recovered. Irs form 1040ez 2010   If you recover an amount you deducted as a loss in an earlier year, you may have to include the amount recovered in your income for the year of recovery. Irs form 1040ez 2010 If any part of the original deduction did not reduce your tax in the earlier year, you do not have to include that part of the recovery in your income. Irs form 1040ez 2010 For more information, see Recoveries in Publication 525. Irs form 1040ez 2010 Proof of Loss To deduct a casualty or theft loss, you must be able to show that there was a casualty or theft. Irs form 1040ez 2010 You also must be able to support the amount you take as a deduction. Irs form 1040ez 2010 Casualty loss proof. Irs form 1040ez 2010   For a casualty loss, you should be able to show all of the following. Irs form 1040ez 2010 The type of casualty (car accident, fire, storm, etc. Irs form 1040ez 2010 ) and when it occurred. Irs form 1040ez 2010 That the loss was a direct result of the casualty. Irs form 1040ez 2010 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. Irs form 1040ez 2010 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Irs form 1040ez 2010 Theft loss proof. Irs form 1040ez 2010   For a theft loss, you should be able to show all of the following. Irs form 1040ez 2010 When you discovered that your property was missing. Irs form 1040ez 2010 That your property was stolen. Irs form 1040ez 2010 That you were the owner of the property. Irs form 1040ez 2010 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Irs form 1040ez 2010    It is important that you have records that will prove your deduction. Irs form 1040ez 2010 If you do not have the actual records to support your deduction, you can use other satisfactory evidence to support it. Irs form 1040ez 2010 Figuring a Loss To determine your deduction for a casualty or theft loss, you must first figure your loss. Irs form 1040ez 2010 Table 1. Irs form 1040ez 2010 Reporting Loss on Deposits IF you choose to report the loss as a(n). Irs form 1040ez 2010 . Irs form 1040ez 2010 . Irs form 1040ez 2010   THEN report it on. Irs form 1040ez 2010 . Irs form 1040ez 2010 . Irs form 1040ez 2010 casualty loss   Form 4684 and Schedule A  (Form 1040). Irs form 1040ez 2010 ordinary loss   Schedule A (Form 1040). Irs form 1040ez 2010 nonbusiness bad debt   Form 8949 and Schedule D (Form 1040). Irs form 1040ez 2010 Amount of loss. Irs form 1040ez 2010   Figure the amount of your loss using the following steps. Irs form 1040ez 2010 Determine your adjusted basis in the property before the casualty or theft. Irs form 1040ez 2010 Determine the decrease in fair market value (FMV) of the property as a result of the casualty or theft. Irs form 1040ez 2010 From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you received or expect to receive. Irs form 1040ez 2010 For personal-use property and property used in performing services as an employee, apply the deduction limits, discussed later, to determine the amount of your deductible loss. Irs form 1040ez 2010 Gain from reimbursement. Irs form 1040ez 2010   If your reimbursement is more than your adjusted basis in the property, you have a gain. Irs form 1040ez 2010 This is true even if the decrease in the FMV of the property is smaller than your adjusted basis. Irs form 1040ez 2010 If you have a gain, you may have to pay tax on it, or you may be able to postpone reporting the gain. Irs form 1040ez 2010 See Figuring a Gain , later. Irs form 1040ez 2010 Business or income-producing property. Irs form 1040ez 2010   If you have business or income-producing property, such as rental property, and it is stolen or completely destroyed, the decrease in FMV is not considered. Irs form 1040ez 2010 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   Loss of inventory. Irs form 1040ez 2010   There are two ways you can deduct a casualty or theft loss of inventory, including items you hold for sale to customers. Irs form 1040ez 2010   One way is to deduct the loss through the increase in the cost of goods sold by properly reporting your opening and closing inventories. Irs form 1040ez 2010 Do not claim this loss again as a casualty or theft loss. Irs form 1040ez 2010 If you take the loss through the increase in the cost of goods sold, include any insurance or other reimbursement you receive for the loss in gross income. Irs form 1040ez 2010   The other way is to deduct the loss separately. Irs form 1040ez 2010 If you deduct it separately, eliminate the affected inventory items from the cost of goods sold by making a downward adjustment to opening inventory or purchases. Irs form 1040ez 2010 Reduce the loss by the reimbursement you received. Irs form 1040ez 2010 Do not include the reimbursement in gross income. Irs form 1040ez 2010 If you do not receive the reimbursement by the end of the year, you may not claim a loss to the extent you have a reasonable prospect of recovery. Irs form 1040ez 2010 Leased property. Irs form 1040ez 2010   If you are liable for casualty damage to property you lease, your loss is the amount you must pay to repair the property minus any insurance or other reimbursement you receive or expect to receive. Irs form 1040ez 2010 Separate computations. Irs form 1040ez 2010   Generally, if a single casualty or theft involves more than one item of property, you must figure the loss on each item separately. Irs form 1040ez 2010 Then combine the losses to determine the total loss from that casualty or theft. Irs form 1040ez 2010 Exception for personal-use real property. Irs form 1040ez 2010   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. Irs form 1040ez 2010 Figure the loss using the smaller of the following. Irs form 1040ez 2010 The decrease in FMV of the entire property. Irs form 1040ez 2010 The adjusted basis of the entire property. Irs form 1040ez 2010   See Real property under Figuring the Deduction, later. Irs form 1040ez 2010 Decrease in Fair Market Value Fair market value (FMV) 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. Irs form 1040ez 2010 The decrease in FMV used to figure the amount of a casualty or theft loss is the difference between the property's fair market value immediately before and immediately after the casualty or theft. Irs form 1040ez 2010 FMV of stolen property. Irs form 1040ez 2010   The FMV of property immediately after a theft is considered to be zero because you no longer have the property. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 Several years ago, you purchased silver dollars at face value for $150. Irs form 1040ez 2010 This is your adjusted basis in the property. Irs form 1040ez 2010 Your silver dollars were stolen this year. Irs form 1040ez 2010 The FMV of the coins was $1,000 just before they were stolen, and insurance did not cover them. Irs form 1040ez 2010 Your theft loss is $150. Irs form 1040ez 2010 Recovered stolen property. Irs form 1040ez 2010   Recovered stolen property is your property that was stolen and later returned to you. Irs form 1040ez 2010 If you recovered property after you had already taken a theft loss deduction, you must refigure your loss using the smaller of the property's adjusted basis (explained later) or the decrease in FMV from the time just before it was stolen until the time it was recovered. Irs form 1040ez 2010 Use this amount to refigure your total loss for the year in which the loss was deducted. Irs form 1040ez 2010   If your refigured loss is less than the loss you deducted, you generally have to report the difference as income in the recovery year. Irs form 1040ez 2010 But report the difference only up to the amount of the loss that reduced your tax. Irs form 1040ez 2010 For more information on the amount to report, see Recoveries in Publication 525. Irs form 1040ez 2010 Figuring Decrease in FMV — Items To Consider To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Irs form 1040ez 2010 However, other measures also can be used to establish certain decreases. Irs form 1040ez 2010 See Appraisal and Cost of cleaning up or making repairs , next. Irs form 1040ez 2010 Appraisal. Irs form 1040ez 2010   An appraisal to determine the difference between the FMV of the property immediately before a casualty or theft and immediately afterwards should be made by a competent appraiser. Irs form 1040ez 2010 The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Irs form 1040ez 2010 This information is needed to limit any deduction to the actual loss resulting from damage to the property. Irs form 1040ez 2010   Several factors are important in evaluating the accuracy of an appraisal, including the following. Irs form 1040ez 2010 The appraiser's familiarity with your property before and after the casualty or theft. Irs form 1040ez 2010 The appraiser's knowledge of sales of comparable property in the area. Irs form 1040ez 2010 The appraiser's knowledge of conditions in the area of the casualty. Irs form 1040ez 2010 The appraiser's method of appraisal. Irs form 1040ez 2010 You may be able to use an appraisal that you used to get a federal loan (or a federal loan guarantee) as the result of a federally declared disaster to establish the amount of your disaster loss. Irs form 1040ez 2010 For more information on disasters, see Disaster Area Losses, later. Irs form 1040ez 2010 Cost of cleaning up or making repairs. Irs form 1040ez 2010   The cost of repairing damaged property is not part of a casualty loss. Irs form 1040ez 2010 Neither is the cost of cleaning up after a casualty. Irs form 1040ez 2010 But you can use the cost of cleaning up or of making repairs after a casualty as a measure of the decrease in FMV if you meet all the following conditions. Irs form 1040ez 2010 The repairs are actually made. Irs form 1040ez 2010 The repairs are necessary to bring the property back to its condition before the casualty. Irs form 1040ez 2010 The amount spent for repairs is not excessive. Irs form 1040ez 2010 The repairs take care of the damage only. Irs form 1040ez 2010 The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Irs form 1040ez 2010 Landscaping. Irs form 1040ez 2010   The cost of restoring landscaping to its original condition after a casualty may indicate the decrease in FMV. Irs form 1040ez 2010 You may be able to measure your loss by what you spend on the following. Irs form 1040ez 2010 Removing destroyed or damaged trees and shrubs, minus any salvage you receive. Irs form 1040ez 2010 Pruning and other measures taken to preserve damaged trees and shrubs. Irs form 1040ez 2010 Replanting necessary to restore the property to its approximate value before the casualty. Irs form 1040ez 2010 Car value. Irs form 1040ez 2010   Books issued by various automobile organizations that list your car may be useful in figuring the value of your car. Irs form 1040ez 2010 You can use the books' retail values and modify them by factors such as the mileage and condition of your car to figure its value. Irs form 1040ez 2010 The prices are not official, but they may be useful in determining value and suggesting relative prices for comparison with current sales and offerings in your area. Irs form 1040ez 2010 If your car is not listed in the books, determine its value from other sources. Irs form 1040ez 2010 A dealer's offer for your car as a trade-in on a new car is not usually a measure of its true value. Irs form 1040ez 2010 Figuring Decrease in FMV — Items Not To Consider You generally should not consider the following items when attempting to establish the decrease in FMV of your property. Irs form 1040ez 2010 Cost of protection. Irs form 1040ez 2010   The cost of protecting your property against a casualty or theft is not part of a casualty or theft loss. Irs form 1040ez 2010 The amount you spend on insurance or to board up your house against a storm is not part of your loss. Irs form 1040ez 2010 If the property is business property, these expenses are deductible as business expenses. Irs form 1040ez 2010   If you make permanent improvements to your property to protect it against a casualty or theft, add the cost of these improvements to your basis in the property. Irs form 1040ez 2010 An example would be the cost of a dike to prevent flooding. Irs form 1040ez 2010 Exception. Irs form 1040ez 2010   You cannot increase your basis in the property by, or deduct as a business expense, any expenditures you made with respect to qualified disaster mitigation payments (discussed later under Disaster Area Losses ). Irs form 1040ez 2010 Related expenses. Irs form 1040ez 2010   The incidental expenses due to a casualty or theft, such as expenses for the treatment of personal injuries, for temporary housing, or for a rental car, are not part of your casualty or theft loss. Irs form 1040ez 2010 However, they may be deductible as business expenses if the damaged or stolen property is business property. Irs form 1040ez 2010 Replacement cost. Irs form 1040ez 2010   The cost of replacing stolen or destroyed property is not part of a casualty or theft loss. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 You bought a new chair 4 years ago for $300. Irs form 1040ez 2010 In April, a fire destroyed the chair. Irs form 1040ez 2010 You estimate that it would cost $500 to replace it. Irs form 1040ez 2010 If you had sold the chair before the fire, you estimate that you could have received only $100 for it because it was 4 years old. Irs form 1040ez 2010 The chair was not insured. Irs form 1040ez 2010 Your loss is $100, the FMV of the chair before the fire. Irs form 1040ez 2010 It is not $500, the replacement cost. Irs form 1040ez 2010 Sentimental value. Irs form 1040ez 2010   Do not consider sentimental value when determining your loss. Irs form 1040ez 2010 If a family portrait, heirloom, or keepsake is damaged, destroyed, or stolen, you must base your loss on its FMV, as limited by your adjusted basis in the property. Irs form 1040ez 2010 Decline in market value of property in or near casualty area. Irs form 1040ez 2010   A decrease in the value of your property because it is in or near an area that suffered a casualty, or that might again suffer a casualty, is not to be taken into consideration. Irs form 1040ez 2010 You have a loss only for actual casualty damage to your property. Irs form 1040ez 2010 However, if your home is in a federally declared disaster area, see Disaster Area Losses , later. Irs form 1040ez 2010 Costs of photographs and appraisals. Irs form 1040ez 2010   Photographs taken after a casualty will be helpful in establishing the condition and value of the property after it was damaged. Irs form 1040ez 2010 Photographs showing the condition of the property after it was repaired, restored, or replaced may also be helpful. Irs form 1040ez 2010   Appraisals are used to figure the decrease in FMV because of a casualty or theft. Irs form 1040ez 2010 See Appraisal , earlier, under Figuring Decrease in FMV — Items To Consider, for information about appraisals. Irs form 1040ez 2010   The costs of photographs and appraisals used as evidence of the value and condition of property damaged as a result of a casualty are not a part of the loss. Irs form 1040ez 2010 They are expenses in determining your tax liability. Irs form 1040ez 2010 You can claim these costs as a miscellaneous itemized deduction subject to the 2%-of-adjusted-gross-income limit on Schedule A (Form 1040). Irs form 1040ez 2010 Adjusted Basis The measure of your investment in the property you own is its basis. Irs form 1040ez 2010 For property you buy, your basis is usually its cost to you. Irs form 1040ez 2010 For property you acquire in some other way, such as inheriting it, receiving it as a gift, or getting it in a nontaxable exchange, you must figure your basis in another way, as explained in Publication 551. Irs form 1040ez 2010 If you inherited the property from someone who died in 2010 and the executor of the decedent's estate made the election to file Form 8939, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. Irs form 1040ez 2010 Adjustments to basis. Irs form 1040ez 2010    While you own the property, various events may take place that change your basis. Irs form 1040ez 2010 Some events, such as additions or permanent improvements to the property, increase basis. Irs form 1040ez 2010 Others, such as earlier casualty losses and depreciation deductions, decrease basis. Irs form 1040ez 2010 When you add the increases to the basis and subtract the decreases from the basis, the result is your adjusted basis. Irs form 1040ez 2010 See Publication 551 for more information on figuring the basis of your property. Irs form 1040ez 2010 Insurance and Other Reimbursements If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Irs form 1040ez 2010 You do not have a casualty or theft loss to the extent you are reimbursed. Irs form 1040ez 2010 If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Irs form 1040ez 2010 You must reduce your loss even if you do not receive payment until a later tax year. Irs form 1040ez 2010 See Reimbursement Received After Deducting Loss , later. Irs form 1040ez 2010 Failure to file a claim for reimbursement. Irs form 1040ez 2010   If your property is covered by insurance, you must file a timely insurance claim for reimbursement of your loss. Irs form 1040ez 2010 Otherwise, you cannot deduct this loss as a casualty or theft. Irs form 1040ez 2010 The portion of the loss usually not covered by insurance (for example, a deductible) is not subject to this rule. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 You have a car insurance policy with a $1,000 deductible. Irs form 1040ez 2010 Because your insurance did not cover the first $1,000 of an auto collision, the $1,000 would be deductible (subject to the $100 and 10% rules, discussed later). Irs form 1040ez 2010 This is true, even if you do not file an insurance claim, because your insurance policy would never have reimbursed you for the deductible. Irs form 1040ez 2010 Types of Reimbursements The most common type of reimbursement is an insurance payment for your stolen or damaged property. Irs form 1040ez 2010 Other types of reimbursements are discussed next. Irs form 1040ez 2010 Also see the Instructions for Form 4684. Irs form 1040ez 2010 Employer's emergency disaster fund. Irs form 1040ez 2010   If you receive money from your employer's emergency disaster fund and you must use that money to rehabilitate or replace property on which you are claiming a casualty loss deduction, you must take that money into consideration in computing the casualty loss deduction. Irs form 1040ez 2010 Take into consideration only the amount you used to replace your destroyed or damaged property. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 Your home was extensively damaged by a tornado. Irs form 1040ez 2010 Your loss after reimbursement from your insurance company was $10,000. Irs form 1040ez 2010 Your employer set up a disaster relief fund for its employees. Irs form 1040ez 2010 Employees receiving money from the fund had to use it to rehabilitate or replace their damaged or destroyed property. Irs form 1040ez 2010 You received $4,000 from the fund and spent the entire amount on repairs to your home. Irs form 1040ez 2010 In figuring your casualty loss, you must reduce your unreimbursed loss ($10,000) by the $4,000 you received from your employer's fund. Irs form 1040ez 2010 Your casualty loss before applying the deduction limits (discussed later) is $6,000. Irs form 1040ez 2010 Cash gifts. Irs form 1040ez 2010   If you receive excludable cash gifts as a disaster victim and there are no limits on how you can use the money, you do not reduce your casualty loss by these excludable cash gifts. Irs form 1040ez 2010 This applies even if you use the money to pay for repairs to property damaged in the disaster. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 Your home was damaged by a hurricane. Irs form 1040ez 2010 Relatives and neighbors made cash gifts to you that were excludable from your income. Irs form 1040ez 2010 You used part of the cash gifts to pay for repairs to your home. Irs form 1040ez 2010 There were no limits or restrictions on how you could use the cash gifts. Irs form 1040ez 2010 It was an excludable gift, so the money you received and used to pay for repairs to your home does not reduce your casualty loss on the damaged home. Irs form 1040ez 2010 Insurance payments for living expenses. Irs form 1040ez 2010   You do not reduce your casualty loss by insurance payments you receive to cover living expenses in either of the following situations. Irs form 1040ez 2010 You lose the use of your main home because of a casualty. Irs form 1040ez 2010 Government authorities do not allow you access to your main home because of a casualty or threat of one. Irs form 1040ez 2010 Inclusion in income. Irs form 1040ez 2010   If these insurance payments are more than the temporary increase in your living expenses, you must include the excess in your income. Irs form 1040ez 2010 Report this amount on Form 1040, line 21. Irs form 1040ez 2010 However, if the casualty occurs in a federally declared disaster area, none of the insurance payments are taxable. Irs form 1040ez 2010 See Qualified disaster relief payments , later, under Disaster Area Losses. Irs form 1040ez 2010   A temporary increase in your living expenses is the difference between the actual living expenses you and your family incurred during the period you could not use your home and your normal living expenses for that period. Irs form 1040ez 2010 Actual living expenses are the reasonable and necessary expenses incurred because of the loss of your main home. Irs form 1040ez 2010 Generally, these expenses include the amounts you pay for the following. Irs form 1040ez 2010 Renting suitable housing. Irs form 1040ez 2010 Transportation. Irs form 1040ez 2010 Food. Irs form 1040ez 2010 Utilities. Irs form 1040ez 2010 Miscellaneous services. Irs form 1040ez 2010 Normal living expenses consist of these same expenses that you would have incurred but did not because of the casualty or the threat of one. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 As a result of a fire, you vacated your apartment for a month and moved to a motel. Irs form 1040ez 2010 You normally pay $525 a month for rent. Irs form 1040ez 2010 None was charged for the month the apartment was vacated. Irs form 1040ez 2010 Your motel rent for this month was $1,200. Irs form 1040ez 2010 You normally pay $200 a month for food. Irs form 1040ez 2010 Your food expenses for the month you lived in the motel were $400. Irs form 1040ez 2010 You received $1,100 from your insurance company to cover your living expenses. Irs form 1040ez 2010 You determine the payment you must include in income as follows. Irs form 1040ez 2010 1. Irs form 1040ez 2010 Insurance payment for living expenses $1,100 2. Irs form 1040ez 2010 Actual expenses during the month you are unable to use your home because of the fire $1,600   3. Irs form 1040ez 2010 Normal living expenses 725   4. Irs form 1040ez 2010 Temporary increase in living expenses: Subtract line 3  from line 2 875 5. Irs form 1040ez 2010 Amount of payment includible in income: Subtract line 4 from line 1 $ 225 Tax year of inclusion. Irs form 1040ez 2010   You include the taxable part of the insurance payment in income for the year you regain the use of your main home or, if later, for the year you receive the taxable part of the insurance payment. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 Your main home was destroyed by a tornado in August 2011. Irs form 1040ez 2010 You regained use of your home in November 2012. Irs form 1040ez 2010 The insurance payments you received in 2011 and 2012 were $1,500 more than the temporary increase in your living expenses during those years. Irs form 1040ez 2010 You include this amount in income on your 2012 Form 1040. Irs form 1040ez 2010 If, in 2013, you receive further payments to cover the living expenses you had in 2011 and 2012, you must include those payments in income on your 2013 Form 1040. Irs form 1040ez 2010 Disaster relief. Irs form 1040ez 2010   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. Irs form 1040ez 2010 Table 2. Irs form 1040ez 2010 Deduction Limit Rules for Personal-Use and Employee Property       $100 Rule 10% Rule 2% Rule General Application You must reduce each casualty or theft loss by $100 when figuring your deduction. Irs form 1040ez 2010 Apply this rule to personal-use property after you have figured the amount of your loss. Irs form 1040ez 2010 You must reduce your total casualty or theft loss by 10% of your adjusted gross income. Irs form 1040ez 2010 Apply this rule to personal-use property after you reduce each loss by $100 (the $100 rule). Irs form 1040ez 2010 You must reduce your total casualty or theft loss by 2% of your adjusted gross income. Irs form 1040ez 2010 Apply this rule to property you used in performing services as an employee after you have figured the amount of your loss and added it to your job expenses and most other miscellaneous itemized deductions. Irs form 1040ez 2010 Single Event Apply this rule only once, even if many pieces of property are affected. Irs form 1040ez 2010 Apply this rule only once, even if many pieces of property are affected. Irs form 1040ez 2010 Apply this rule only once, even if many pieces of property are affected. Irs form 1040ez 2010 More Than One Event Apply to the loss from each event. Irs form 1040ez 2010 Apply to the total of all your losses from all events. Irs form 1040ez 2010 Apply to the total of all your losses from all events. Irs form 1040ez 2010 More Than One Person— With Loss From the   Same Event  (other than a married couple  filing jointly) Apply separately to each person. Irs form 1040ez 2010 Apply separately to each person. Irs form 1040ez 2010 Apply separately to each person. Irs form 1040ez 2010 Married Couple—  With Loss From the  Same Event Filing Joint Return Apply as if you were one person. Irs form 1040ez 2010 Apply as if you were one person. Irs form 1040ez 2010 Apply as if you were one person. Irs form 1040ez 2010 Filing Separate Return Apply separately to each spouse. Irs form 1040ez 2010 Apply separately to each spouse. Irs form 1040ez 2010 Apply separately to each spouse. Irs form 1040ez 2010 More Than One Owner (other than a married couple filing jointly) Apply separately to each owner of jointly owned property. Irs form 1040ez 2010 Apply separately to each owner of jointly owned property. Irs form 1040ez 2010 Apply separately to each owner of jointly owned property. Irs form 1040ez 2010    Qualified disaster relief payments you receive for expenses you incurred as a result of a federally declared disaster, are not taxable income to you. Irs form 1040ez 2010 For more information, see Qualified disaster relief payments under Disaster Area Losses, later. Irs form 1040ez 2010   Disaster unemployment assistance payments are unemployment benefits that are taxable. Irs form 1040ez 2010   Generally, disaster relief grants received under the Robert T. Irs form 1040ez 2010 Stafford Disaster Relief and Emergency Assistance Act are not included in your income. Irs form 1040ez 2010 See Federal disaster relief grants , later, under Disaster Area Losses. Irs form 1040ez 2010 Loan proceeds. Irs form 1040ez 2010   Do not reduce your casualty loss by loan proceeds you use to rehabilitate or replace property on which you are claiming a casualty loss deduction. Irs form 1040ez 2010 If you have a federal loan that is canceled (forgiven), see Federal loan canceled , later, under Disaster Area Losses. Irs form 1040ez 2010 Reimbursement Received After Deducting Loss If you figured your casualty or theft loss using the amount of your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement. Irs form 1040ez 2010 This section explains the adjustment you may have to make. Irs form 1040ez 2010 Actual reimbursement less than expected. Irs form 1040ez 2010   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. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 Your personal car had a FMV of $2,000 when it was destroyed in a collision with another car in 2012. Irs form 1040ez 2010 The accident was due to the negligence of the other driver. Irs form 1040ez 2010 At the end of 2012, there was a reasonable prospect that the owner of the other car would reimburse you in full. Irs form 1040ez 2010 You did not have a deductible loss in 2012. Irs form 1040ez 2010 In January 2013, the court awards you a judgment of $2,000. Irs form 1040ez 2010 However, in July it becomes apparent that you will be unable to collect any amount from the other driver. Irs form 1040ez 2010 Since this is your only casualty or theft loss, you can deduct the loss in 2013 that is figured by applying the Deduction Limits (discussed later). Irs form 1040ez 2010 Actual reimbursement more than expected. Irs form 1040ez 2010   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. Irs form 1040ez 2010 However, if any part of the original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. Irs form 1040ez 2010 You do not refigure your tax for the year you claimed the deduction. Irs form 1040ez 2010 See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 In 2012, a hurricane destroyed your motorboat. Irs form 1040ez 2010 Your loss was $3,000, and you estimated that your insurance would cover $2,500 of it. Irs form 1040ez 2010 You did not itemize deductions on your 2012 return, so you could not deduct the loss. Irs form 1040ez 2010 When the insurance company reimburses you for the loss, you do not report any of the reimbursement as income. Irs form 1040ez 2010 This is true even if it is for the full $3,000 because you did not deduct the loss on your 2012 return. Irs form 1040ez 2010 The loss did not reduce your tax. Irs form 1040ez 2010    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. Irs form 1040ez 2010 If you have already taken a deduction for a loss and you receive the reimbursement in a later year, you may have to include the gain in your income for the later year. Irs form 1040ez 2010 Include the gain as ordinary income up to the amount of your deduction that reduced your tax for the earlier year. Irs form 1040ez 2010 You may be able to postpone reporting any remaining gain as explained under Postponement of Gain, later. Irs form 1040ez 2010 Actual reimbursement same as expected. Irs form 1040ez 2010   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. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 In December 2013, you had a collision while driving your personal car. Irs form 1040ez 2010 Repairs to the car cost $950. Irs form 1040ez 2010 You had $100 deductible collision insurance. Irs form 1040ez 2010 Your insurance company agreed to reimburse you for the rest of the damage. Irs form 1040ez 2010 Because you expected a reimbursement from the insurance company, you did not have a casualty loss deduction in 2013. Irs form 1040ez 2010 Due to the $100 rule, you cannot deduct the $100 you paid as the deductible. Irs form 1040ez 2010 When you receive the $850 from the insurance company in 2014, do not report it as income. Irs form 1040ez 2010 Deduction Limits After you have figured your casualty or theft loss, you must figure how much of the loss you can deduct. Irs form 1040ez 2010 The deduction for casualty and theft losses of employee property and personal-use property is limited. Irs form 1040ez 2010 A loss on employee property is subject to the 2% rule, discussed next. Irs form 1040ez 2010 With certain exceptions, a loss on property you own for your personal use is subject to the $100 and 10% rules, discussed later. Irs form 1040ez 2010 The 2%, $100, and 10% rules are also summarized in Table 2 . Irs form 1040ez 2010 Losses on business property (other than employee property) and income-producing property are not subject to these rules. Irs form 1040ez 2010 However, if your casualty or theft loss involved a home you used for business or rented out, your deductible loss may be limited. Irs form 1040ez 2010 See the Instructions for Form 4684, Section B. Irs form 1040ez 2010 If the casualty or theft loss involved property used in a passive activity, see Form 8582, Passive Activity Loss Limitations, and its instructions. Irs form 1040ez 2010 2% Rule The casualty and theft loss deduction for employee property, when added to your job expenses and most other miscellaneous itemized deductions on Schedule A (Form 1040) or Form 1040NR, Schedule A, must be reduced by 2% of your adjusted gross income. Irs form 1040ez 2010 Employee property is property used in performing services as an employee. Irs form 1040ez 2010 $100 Rule After you have figured your casualty or theft loss on personal-use property, as discussed earlier, you must reduce that loss by $100. Irs form 1040ez 2010 This reduction applies to each total casualty or theft loss. Irs form 1040ez 2010 It does not matter how many pieces of property are involved in an event. Irs form 1040ez 2010 Only a single $100 reduction applies. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 You have $750 deductible collision insurance on your car. Irs form 1040ez 2010 The car is damaged in a collision. Irs form 1040ez 2010 The insurance company pays you for the damage minus the $750 deductible. Irs form 1040ez 2010 The amount of the casualty loss is based solely on the deductible. Irs form 1040ez 2010 The casualty loss is $650 ($750 − $100) because the first $100 of a casualty loss on personal-use property is not deductible. Irs form 1040ez 2010 Single event. Irs form 1040ez 2010   Generally, events closely related in origin cause a single casualty. Irs form 1040ez 2010 It is a single casualty when the damage is from two or more closely related causes, such as wind and flood damage caused by the same storm. Irs form 1040ez 2010 A single casualty may also damage two or more pieces of property, such as a hailstorm that damages both your home and your car parked in your driveway. Irs form 1040ez 2010 Example 1. Irs form 1040ez 2010 A thunderstorm destroyed your pleasure boat. Irs form 1040ez 2010 You also lost some boating equipment in the storm. Irs form 1040ez 2010 Your loss was $5,000 on the boat and $1,200 on the equipment. Irs form 1040ez 2010 Your insurance company reimbursed you $4,500 for the damage to your boat. Irs form 1040ez 2010 You had no insurance coverage on the equipment. Irs form 1040ez 2010 Your casualty loss is from a single event and the $100 rule applies once. Irs form 1040ez 2010 Figure your loss before applying the 10% rule (discussed later) as follows. Irs form 1040ez 2010     Boat Equipment 1. Irs form 1040ez 2010 Loss $5,000 $1,200 2. Irs form 1040ez 2010 Subtract insurance 4,500 -0- 3. Irs form 1040ez 2010 Loss after reimbursement $ 500 $1,200 4. Irs form 1040ez 2010 Total loss $1,700 5. Irs form 1040ez 2010 Subtract $100 100 6. Irs form 1040ez 2010 Loss before 10% rule $1,600 Example 2. Irs form 1040ez 2010 Thieves broke into your home in January and stole a ring and a fur coat. Irs form 1040ez 2010 You had a loss of $200 on the ring and $700 on the coat. Irs form 1040ez 2010 This is a single theft. Irs form 1040ez 2010 The $100 rule applies to the total $900 loss. Irs form 1040ez 2010 Example 3. Irs form 1040ez 2010 In September, hurricane winds blew the roof off your home. Irs form 1040ez 2010 Flood waters caused by the hurricane further damaged your home and destroyed your furniture and personal car. Irs form 1040ez 2010 This is considered a single casualty. Irs form 1040ez 2010 The $100 rule is applied to your total loss from the flood waters and the wind. Irs form 1040ez 2010 More than one loss. Irs form 1040ez 2010   If you have more than one casualty or theft loss during your tax year, you must reduce each loss by $100. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 Your family car was damaged in an accident in January. Irs form 1040ez 2010 Your loss after the insurance reimbursement was $75. Irs form 1040ez 2010 In February, your car was damaged in another accident. Irs form 1040ez 2010 This time your loss after the insurance reimbursement was $90. Irs form 1040ez 2010 Apply the $100 rule to each separate casualty loss. Irs form 1040ez 2010 Since neither accident resulted in a loss of over $100, you are not entitled to any deduction for these accidents. Irs form 1040ez 2010 More than one person. Irs form 1040ez 2010   If two or more individuals (other than a husband and wife filing a joint return) have losses from the same casualty or theft, the $100 rule applies separately to each individual. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 A fire damaged your house and also damaged the personal property of your house guest. Irs form 1040ez 2010 You must reduce your loss by $100. Irs form 1040ez 2010 Your house guest must reduce his or her loss by $100. Irs form 1040ez 2010 Married taxpayers. Irs form 1040ez 2010   If you and your spouse file a joint return, you are treated as one individual in applying the $100 rule. Irs form 1040ez 2010 It does not matter whether you own the property jointly or separately. Irs form 1040ez 2010   If you and your spouse have a casualty or theft loss and you file separate returns, each of you must reduce your loss by $100. Irs form 1040ez 2010 This is true even if you own the property jointly. Irs form 1040ez 2010 If one spouse owns the property, only that spouse can figure a loss deduction on a separate return. Irs form 1040ez 2010   If the casualty or theft loss is on property you own as tenants by the entirety, each of you can figure your deduction on only one-half of the loss on separate returns. Irs form 1040ez 2010 Neither of you can figure your deduction on the entire loss on a separate return. Irs form 1040ez 2010 Each of you must reduce the loss by $100. Irs form 1040ez 2010 More than one owner. Irs form 1040ez 2010   If two or more individuals (other than a husband and wife filing a joint return) have a loss on property jointly owned, the $100 rule applies separately to each. Irs form 1040ez 2010 For example, if two sisters live together in a home they own jointly and they have a casualty loss on the home, the $100 rule applies separately to each sister. Irs form 1040ez 2010 10% Rule You must reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Irs form 1040ez 2010 Apply this rule after you reduce each loss by $100. Irs form 1040ez 2010 For more information, see the Form 4684 instructions. Irs form 1040ez 2010 If you have both gains and losses from casualties or thefts, see Gains and losses , later in this discussion. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 In June, you discovered that your house had been burglarized. Irs form 1040ez 2010 Your loss after insurance reimbursement was $2,000. Irs form 1040ez 2010 Your adjusted gross income for the year you discovered the theft is $29,500. Irs form 1040ez 2010 Figure your theft loss as follows. Irs form 1040ez 2010 1. Irs form 1040ez 2010 Loss after insurance $2,000 2. Irs form 1040ez 2010 Subtract $100 100 3. Irs form 1040ez 2010 Loss after $100 rule $1,900 4. Irs form 1040ez 2010 Subtract 10% of $29,500 AGI $2,950 5. Irs form 1040ez 2010 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 ($2,950). Irs form 1040ez 2010 More than one loss. Irs form 1040ez 2010   If you have more than one casualty or theft loss during your tax year, reduce each loss by any reimbursement and by $100. Irs form 1040ez 2010 Then you must reduce the total of all your losses by 10% of your adjusted gross income. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 In March, you had a car accident that totally destroyed your car. Irs form 1040ez 2010 You did not have collision insurance on your car, so you did not receive any insurance reimbursement. Irs form 1040ez 2010 Your loss on the car was $1,800. Irs form 1040ez 2010 In November, a fire damaged your basement and totally destroyed the furniture, washer, dryer, and other items you had stored there. Irs form 1040ez 2010 Your loss on the basement items after reimbursement was $2,100. Irs form 1040ez 2010 Your adjusted gross income for the year that the accident and fire occurred is $25,000. Irs form 1040ez 2010 You figure your casualty loss deduction as follows. Irs form 1040ez 2010     Car Basement 1. Irs form 1040ez 2010 Loss $1,800 $2,100 2. Irs form 1040ez 2010 Subtract $100 per incident 100 100 3. Irs form 1040ez 2010 Loss after $100 rule $1,700 $2,000 4. Irs form 1040ez 2010 Total loss $3,700 5. Irs form 1040ez 2010 Subtract 10% of $25,000 AGI 2,500 6. Irs form 1040ez 2010 Casualty loss deduction $1,200 Married taxpayers. Irs form 1040ez 2010   If you and your spouse file a joint return, you are treated as one individual in applying the 10% rule. Irs form 1040ez 2010 It does not matter if you own the property jointly or separately. Irs form 1040ez 2010   If you file separate returns, the 10% rule applies to each return on which a loss is claimed. Irs form 1040ez 2010 More than one owner. Irs form 1040ez 2010   If two or more individuals (other than husband and wife filing a joint return) have a loss on property that is owned jointly, the 10% rule applies separately to each. Irs form 1040ez 2010 Gains and losses. Irs form 1040ez 2010   If you have casualty or theft gains as well as losses to personal-use property, you must compare your total gains to your total losses. Irs form 1040ez 2010 Do this after you have reduced each loss by any reimbursements and by $100 but before you have reduced the losses by 10% of your adjusted gross income. Irs form 1040ez 2010 Casualty or theft gains do not include gains you choose to postpone. Irs form 1040ez 2010 See Postponement of Gain, later. Irs form 1040ez 2010 Losses more than gains. Irs form 1040ez 2010   If your losses are more than your recognized gains, subtract your gains from your losses and reduce the result by 10% of your adjusted gross income. Irs form 1040ez 2010 The rest, if any, is your deductible loss from personal-use property. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 Your theft loss after reducing it by reimbursements and by $100 is $2,700. Irs form 1040ez 2010 Your casualty gain is $700. Irs form 1040ez 2010 Your loss is more than your gain, so you must reduce your $2,000 net loss ($2,700 − $700) by 10% of your adjusted gross income. Irs form 1040ez 2010 Gains more than losses. Irs form 1040ez 2010   If your recognized gains are more than your losses, subtract your losses from your gains. Irs form 1040ez 2010 The difference is treated as a capital gain and must be reported on Schedule D (Form 1040). Irs form 1040ez 2010 The 10% rule does not apply to your gains. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 Your theft loss is $600 after reducing it by reimbursements and by $100. Irs form 1040ez 2010 Your casualty gain is $1,600. Irs form 1040ez 2010 Because your gain is more than your loss, you must report the $1,000 net gain ($1,600 − $600) on Schedule D (Form 1040). Irs form 1040ez 2010 More information. Irs form 1040ez 2010   For information on how to figure recognized gains, see Figuring a Gain , later. Irs form 1040ez 2010 Figuring the Deduction Generally, you must figure your loss separately for each item stolen, damaged, or destroyed. Irs form 1040ez 2010 However, a special rule applies to real property you own for personal use. Irs form 1040ez 2010 Real property. Irs form 1040ez 2010   In figuring a loss to real estate you own for personal use, all improvements (such as buildings and ornamental trees and the land containing the improvements) are considered together. Irs form 1040ez 2010 Example 1. Irs form 1040ez 2010 In June, a fire destroyed your lakeside cottage, which cost $144,800 (including $14,500 for the land) several years ago. Irs form 1040ez 2010 (Your land was not damaged. Irs form 1040ez 2010 ) This was your only casualty or theft loss for the year. Irs form 1040ez 2010 The FMV of the property immediately before the fire was $180,000 ($145,000 for the cottage and $35,000 for the land). Irs form 1040ez 2010 The FMV immediately after the fire was $35,000 (value of the land). Irs form 1040ez 2010 You collected $130,000 from the insurance company. Irs form 1040ez 2010 Your adjusted gross income for the year the fire occurred is $80,000. Irs form 1040ez 2010 Your deduction for the casualty loss is $6,700, figured in the following manner. Irs form 1040ez 2010 1. Irs form 1040ez 2010 Adjusted basis of the entire property (cost in this example) $144,800 2. Irs form 1040ez 2010 FMV of entire property  before fire $180,000 3. Irs form 1040ez 2010 FMV of entire property after fire 35,000 4. Irs form 1040ez 2010 Decrease in FMV of entire property (line 2 − line 3) $145,000 5. Irs form 1040ez 2010 Loss (smaller of line 1 or line 4) $144,800 6. Irs form 1040ez 2010 Subtract insurance 130,000 7. Irs form 1040ez 2010 Loss after reimbursement $14,800 8. Irs form 1040ez 2010 Subtract $100 100 9. Irs form 1040ez 2010 Loss after $100 rule $14,700 10. Irs form 1040ez 2010 Subtract 10% of $80,000 AGI 8,000 11. Irs form 1040ez 2010 Casualty loss deduction $ 6,700 Example 2. Irs form 1040ez 2010 You bought your home a few years ago. Irs form 1040ez 2010 You paid $150,000 ($10,000 for the land and $140,000 for the house). Irs form 1040ez 2010 You also spent an additional $2,000 for landscaping. Irs form 1040ez 2010 This year a fire destroyed your home. Irs form 1040ez 2010 The fire also damaged the shrubbery and trees in your yard. Irs form 1040ez 2010 The fire was your only casualty or theft loss this year. Irs form 1040ez 2010 Competent appraisers valued the property as a whole at $175,000 before the fire, but only $50,000 after the fire. Irs form 1040ez 2010 Shortly after the fire, the insurance company paid you $95,000 for the loss. Irs form 1040ez 2010 Your adjusted gross income for this year is $70,000. Irs form 1040ez 2010 You figure your casualty loss deduction as follows. Irs form 1040ez 2010 1. Irs form 1040ez 2010 Adjusted basis of the entire property (cost of land, building, and landscaping) $152,000 2. Irs form 1040ez 2010 FMV of entire property  before fire $175,000 3. Irs form 1040ez 2010 FMV of entire property after fire 50,000 4. Irs form 1040ez 2010 Decrease in FMV of entire property (line 2 − line 3) $125,000 5. Irs form 1040ez 2010 Loss (smaller of line 1 or line 4) $125,000 6. Irs form 1040ez 2010 Subtract insurance 95,000 7. Irs form 1040ez 2010 Loss after reimbursement $30,000 8. Irs form 1040ez 2010 Subtract $100 100 9. Irs form 1040ez 2010 Loss after $100 rule $29,900 10. Irs form 1040ez 2010 Subtract 10% of $70,000 AGI 7,000 11. Irs form 1040ez 2010 Casualty loss deduction $ 22,900 Personal property. Irs form 1040ez 2010   Personal property is any property that is not real property. Irs form 1040ez 2010 If your personal property is stolen or is damaged or destroyed by a casualty, you must figure your loss separately for each item of property. Irs form 1040ez 2010 Then combine these separate losses to figure the total loss. Irs form 1040ez 2010 Reduce the total loss by $100 and 10% of your adjusted gross income to figure the loss deduction. Irs form 1040ez 2010 Example 1. Irs form 1040ez 2010 In August, a storm destroyed your pleasure boat, which cost $18,500. Irs form 1040ez 2010 This was your only casualty or theft loss for the year. Irs form 1040ez 2010 Its FMV immediately before the storm was $17,000. Irs form 1040ez 2010 You had no insurance, but were able to salvage the motor of the boat and sell it for $200. Irs form 1040ez 2010 Your adjusted gross income for the year the casualty occurred is $70,000. Irs form 1040ez 2010 Although the motor was sold separately, it is part of the boat and not a separate item of property. Irs form 1040ez 2010 You figure your casualty loss deduction as follows. Irs form 1040ez 2010 1. Irs form 1040ez 2010 Adjusted basis (cost in this example) $18,500 2. Irs form 1040ez 2010 FMV before storm $17,000 3. Irs form 1040ez 2010 FMV after storm 200 4. Irs form 1040ez 2010 Decrease in FMV  (line 2 − line 3) $16,800 5. Irs form 1040ez 2010 Loss (smaller of line 1 or line 4) $16,800 6. Irs form 1040ez 2010 Subtract insurance -0- 7. Irs form 1040ez 2010 Loss after reimbursement $16,800 8. Irs form 1040ez 2010 Subtract $100 100 9. Irs form 1040ez 2010 Loss after $100 rule $16,700 10. Irs form 1040ez 2010 Subtract 10% of $70,000 AGI 7,000 11. Irs form 1040ez 2010 Casualty loss deduction $ 9,700 Example 2. Irs form 1040ez 2010 In June, you were involved in an auto accident that totally destroyed your personal car and your antique pocket watch. Irs form 1040ez 2010 You had bought the car for $30,000. Irs form 1040ez 2010 The FMV of the car just before the accident was $17,500. Irs form 1040ez 2010 Its FMV just after the accident was $180 (scrap value). Irs form 1040ez 2010 Your insurance company reimbursed you $16,000. Irs form 1040ez 2010 Your watch was not insured. Irs form 1040ez 2010 You had purchased it for $250. Irs form 1040ez 2010 Its FMV just before the accident was $500. Irs form 1040ez 2010 Your adjusted gross income for the year the accident occurred is $97,000. Irs form 1040ez 2010 Your casualty loss deduction is zero, figured as follows. Irs form 1040ez 2010     Car Watch 1. Irs form 1040ez 2010 Adjusted basis (cost) $30,000 $250 2. Irs form 1040ez 2010 FMV before accident $17,500 $500 3. Irs form 1040ez 2010 FMV after accident 180 -0- 4. Irs form 1040ez 2010 Decrease in FMV (line 2 − line 3) $17,320 $500 5. Irs form 1040ez 2010 Loss (smaller of line 1 or line 4) $17,320 $250 6. Irs form 1040ez 2010 Subtract insurance 16,000 -0- 7. Irs form 1040ez 2010 Loss after reimbursement $1,320 $250 8. Irs form 1040ez 2010 Total loss $1,570 9. Irs form 1040ez 2010 Subtract $100 100 10. Irs form 1040ez 2010 Loss after $100 rule $1,470 11. Irs form 1040ez 2010 Subtract 10% of $97,000 AGI 9,700 12. Irs form 1040ez 2010 Casualty loss deduction $ -0- Both real and personal properties. Irs form 1040ez 2010   When a casualty involves both real and personal properties, you must figure the loss separately for each type of property. Irs form 1040ez 2010 However, you apply a single $100 reduction to the total loss. Irs form 1040ez 2010 Then, you apply the 10% rule to figure the casualty loss deduction. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 In July, a hurricane damaged your home, which cost you $164,000 including land. Irs form 1040ez 2010 The FMV of the property (both building and land) immediately before the storm was $170,000 and its FMV immediately after the storm was $100,000. Irs form 1040ez 2010 Your household furnishings were also damaged. Irs form 1040ez 2010 You separately figured the loss on each damaged household item and arrived at a total loss of $600. Irs form 1040ez 2010 You collected $50,000 from the insurance company for the damage to your home, but your household furnishings were not insured. Irs form 1040ez 2010 Your adjusted gross income for the year the hurricane occurred is $65,000. Irs form 1040ez 2010 You figure your casualty loss deduction from the hurricane in the following manner. Irs form 1040ez 2010 1. Irs form 1040ez 2010 Adjusted basis of real property (cost in this example) $164,000 2. Irs form 1040ez 2010 FMV of real property before hurricane $170,000 3. Irs form 1040ez 2010 FMV of real property after hurricane 100,000 4. Irs form 1040ez 2010 Decrease in FMV of real property (line 2 − line 3) $70,000 5. Irs form 1040ez 2010 Loss on real property (smaller of line 1 or line 4) $70,000 6. Irs form 1040ez 2010 Subtract insurance 50,000 7. Irs form 1040ez 2010 Loss on real property after reimbursement $20,000 8. Irs form 1040ez 2010 Loss on furnishings $600 9. Irs form 1040ez 2010 Subtract insurance -0- 10. Irs form 1040ez 2010 Loss on furnishings after reimbursement $600 11. Irs form 1040ez 2010 Total loss (line 7 plus line 10) $20,600 12. Irs form 1040ez 2010 Subtract $100 100 13. Irs form 1040ez 2010 Loss after $100 rule $20,500 14. Irs form 1040ez 2010 Subtract 10% of $65,000 AGI 6,500 15. Irs form 1040ez 2010 Casualty loss deduction $14,000 Property used partly for business and partly for personal purposes. Irs form 1040ez 2010   When property is used partly for personal purposes and partly for business or income-producing purposes, the casualty or theft loss deduction must be figured separately for the personal-use portion and for the business or income-producing portion. Irs form 1040ez 2010 You must figure each loss separately because the losses attributed to these two uses are figured in two different ways. Irs form 1040ez 2010 When figuring each loss, allocate the total cost or basis, the FMV before and after the casualty or theft loss, and the insurance or other reimbursement between the business and personal use of the property. Irs form 1040ez 2010 The $100 rule and the 10% rule apply only to the casualty or theft loss on the personal-use portion of the property. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 You own a building that you constructed on leased land. Irs form 1040ez 2010 You use half of the building for your business and you live in the other half. Irs form 1040ez 2010 The cost of the building was $400,000. Irs form 1040ez 2010 You made no further improvements or additions to it. Irs form 1040ez 2010 A flood in March damaged the entire building. Irs form 1040ez 2010 The FMV of the building was $380,000 immediately before the flood and $320,000 afterwards. Irs form 1040ez 2010 Your insurance company reimbursed you $40,000 for the flood damage. Irs form 1040ez 2010 Depreciation on the business part of the building before the flood totaled $24,000. Irs form 1040ez 2010 Your adjusted gross income for the year the flood occurred is $125,000. Irs form 1040ez 2010 You have a deductible business casualty loss of $10,000. Irs form 1040ez 2010 You do not have a deductible personal casualty loss because of the 10% rule. Irs form 1040ez 2010 You figure your loss as follows. Irs form 1040ez 2010     Business   Personal     Part   Part 1. Irs form 1040ez 2010 Cost (total $400,000) $200,000   $200,000 2. Irs form 1040ez 2010 Subtract depreciation 24,000   -0- 3. Irs form 1040ez 2010 Adjusted basis $176,000   $200,000 4. Irs form 1040ez 2010 FMV before flood (total $380,000) $190,000   $190,000 5. Irs form 1040ez 2010 FMV after flood (total $320,000) 160,000   160,000 6. Irs form 1040ez 2010 Decrease in FMV  (line 4 − line 5) $30,000   $30,000 7. Irs form 1040ez 2010 Loss (smaller of line 3 or line 6) $30,000   $30,000 8. Irs form 1040ez 2010 Subtract insurance 20,000   20,000 9. Irs form 1040ez 2010 Loss after reimbursement $10,000   $10,000 10. Irs form 1040ez 2010 Subtract $100 on personal-use property -0-   100 11. Irs form 1040ez 2010 Loss after $100 rule $10,000   $9,900 12. Irs form 1040ez 2010 Subtract 10% of $125,000 AGI on personal-use property -0-   12,500 13. Irs form 1040ez 2010 Deductible business loss $10,000     14. Irs form 1040ez 2010 Deductible personal loss $-0- Figuring a Gain 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. Irs form 1040ez 2010 Your gain is figured as follows. Irs form 1040ez 2010 The amount you receive (discussed next), minus Your adjusted basis in the property at the time of the casualty or theft. Irs form 1040ez 2010 See Adjusted Basis , earlier, for information on adjusted basis. Irs form 1040ez 2010 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. Irs form 1040ez 2010 Amount you receive. Irs form 1040ez 2010   The amount you receive includes any money plus the value of any property you receive minus any expenses you have in obtaining reimbursement. Irs form 1040ez 2010 It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 A hurricane destroyed your personal residence and the insurance company awarded you $145,000. Irs form 1040ez 2010 You received $140,000 in cash. Irs form 1040ez 2010 The remaining $5,000 was paid directly to the holder of a mortgage on the property. Irs form 1040ez 2010 The amount you received includes the $5,000 reimbursement paid on the mortgage. Irs form 1040ez 2010 Main home destroyed. Irs form 1040ez 2010   If you have a gain because your main home was destroyed, you generally can exclude the gain from your income as if you had sold or exchanged your home. Irs form 1040ez 2010 You may be able to exclude up to $250,000 of the gain (up to $500,000 if married filing jointly). Irs form 1040ez 2010 To exclude a gain, you generally must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date it was destroyed. Irs form 1040ez 2010 For information on this exclusion, see Publication 523. Irs form 1040ez 2010 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. Irs form 1040ez 2010 See Postponement of Gain , later. Irs form 1040ez 2010 Reporting a gain. Irs form 1040ez 2010   You generally must report your gain as income in the year you receive the reimbursement. Irs form 1040ez 2010 However, you do not have to report your gain if you meet certain requirements and choose to postpone reporting the gain according to the rules explained under Postponement of Gain, next. Irs form 1040ez 2010   For information on how to report a gain, see How To Report Gains and Losses , later. Irs form 1040ez 2010    If you have a casualty or theft gain on personal-use property that you choose to postpone reporting (as explained next) and you also have another casualty or theft loss on personal-use property, do not consider the gain you are postponing when figuring your casualty or theft loss deduction. Irs form 1040ez 2010 See 10% Rule under Deduction Limits, earlier. Irs form 1040ez 2010 Postponement of 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 or stolen property. Irs form 1040ez 2010 Your basis in the new property is generally the same as your adjusted basis in the property it replaces. Irs form 1040ez 2010 You must ordinarily report the gain on your stolen or destroyed property if you receive money or unlike property as reimbursement. Irs form 1040ez 2010 However, you can choose to postpone reporting the gain if you purchase property that is similar or related in service or use to the stolen or destroyed property within a specified replacement period, discussed later. Irs form 1040ez 2010 You also can choose to postpone reporting the gain if you purchase a controlling interest (at least 80%) in a corporation owning property that is similar or related in service or use to the property. Irs form 1040ez 2010 See Controlling interest in a corporation , later. Irs form 1040ez 2010 If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. Irs form 1040ez 2010 To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. Irs form 1040ez 2010 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. Irs form 1040ez 2010 Example. Irs form 1040ez 2010 In 1970, you bought an oceanfront cottage for your personal use at a cost of $18,000. Irs form 1040ez 2010 You made no further improvements or additions to it. Irs form 1040ez 2010 When a storm destroyed the cottage this January, the cottage was worth $250,000. Irs form 1040ez 2010 You received $146,000 from the insurance company in March. Irs form 1040ez 2010 You had a gain of $128,000 ($146,000 − $18,000). Irs form 1040ez 2010 You spent $144,000 to rebuild the cottage. Irs form 1040ez 2010 Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. Irs form 1040ez 2010 Buying replacement property from a related person. Irs form 1040ez 2010   You cannot postpone reporting a gain from a casualty or theft if you buy the replacement property from a related person (discussed later). Irs form 1040ez 2010 This rule applies to the following taxpayers. Irs form 1040ez 2010 C corporations. Irs form 1040ez 2010 Partnerships in which more than 50% of the capital or profits interests is owned by C corporations. Irs form 1040ez 2010 All others (including individuals, partnerships — other than those in (2) — and S corporations) if the total realized gain for the tax year on all destroyed or stolen properties on which there are realized gains is more than $100,000. Irs form 1040ez 2010 For casualties and thefts described in (3) above, gains cannot be offset by any losses when determining whether the total gain is more than $100,000. Irs form 1040ez 2010 If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. Irs form 1040ez 2010 If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. Irs form 1040ez 2010 Exception. Irs form 1040ez 2010   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 destroyed or stolen property. Irs form 1040ez 2010 Related persons. Irs form 1040ez 2010   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. Irs form 1040ez 2010 For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Irs form 1040ez 2010 Death of a taxpayer. Irs form 1040ez 2010   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. Irs form 1040ez 2010 The executor of the estate or the person succeeding to the funds from the casualty or theft cannot postpone reporting the gain by buying replacement property. Irs form 1040ez 2010 Replacement Property You must buy replacement property for the specific purpose of replacing your destroyed or stolen property. Irs form 1040ez 2010 Property you acquire as a gift or inheritance does not qualify. Irs form 1040ez 2010 You do not have to use the same funds you receive as