Casualty and Theft Losses(p4)

Theft and Casualty Losses

This benefit applies to the counties in both Tables 1 and 2.

The following paragraphs explain changes to casualty and theft losses that were caused by the severe storms, tornadoes, or flooding in the Midwestern disaster areas. For more information, see Publication 547.

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Limits on personal casualty or theft losses.(p4)

Losses of personal use property that arose in a Midwestern disaster area on or after the applicable disaster date are not subject to the $100 or 10% of AGI limits. Qualifying losses include losses from casualties and thefts that arose in a Midwestern disaster area that were attributable to the severe storms, tornadoes, or flooding.

When completing Form 4684, do not include on line 17 any losses that arose in a Midwestern disaster area. A loss arising in a Midwestern disaster area is not considered a loss attributable to a federally declared disaster for purposes of that line and cannot be added to your standard deduction.

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When to deduct the loss.(p5)

Casualty and theft losses are generally deductible only in the year the casualty occurred or the theft was discovered. However, you can elect to deduct losses caused by the severe storms, tornadoes, or flooding on your return for the prior year.

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Special instructions for individuals who elect to claim a Midwestern disaster area casualty or theft loss for 2007.(p5)

Individuals filing or amending their 2007 tax return for casualty or theft losses that were attributable to the severe storms, tornadoes, or flooding should:

Enter "Midwestern Disaster Area" at the top of Form 1040 or Form 1040X, and
Complete the 2008 version of Form 4684. Cross out "2008" and enter "2007" at the top of Form 4684.

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Time limit for making election.(p5)

You must make this election to claim your casualty or theft loss in 2007 by the later of the following dates.

The due date (without extensions) for filing your 2008 income tax return.
The due date (with extensions) for filing your 2007 income tax return.

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Example.(p5)

If you are a calendar year individual taxpayer, you have until April 15, 2009, to amend your 2007 tax return to claim a casualty or theft loss that occurred during 2008.

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