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IRS.gov Website
Publication 17
taxmap/pub17/p17-133.htm#en_us_publink1000173520

Chapter 25
Nonbusiness Casualty and Theft Losses(p166)

What's New for 2010(p166)


taxmap/pub17/p17-133.htm#en_us_publink1000190732

Decrease in personal casualty and theft loss limit.(p166)

Each personal casualty or theft loss is limited to the excess of the loss over $100 (instead of $500). In addition, the 10%-of-AGI limit continues to apply to the net loss.
taxmap/pub17/p17-133.htm#en_us_publink1000250848

Damage from corrosive drywall.(p166)

Under a special procedure, you may be able to claim a casualty loss deduction for amounts you paid to repair damage to your home and household appliances that resulted from corrosive drywall. For details, see Publication 547.
taxmap/pub17/p17-133.htm#en_us_publink1000190733

Disaster losses.(p166)

The special rules that were in effect in 2008 and 2009 for losses of personal use property attributable to federally declared disasters do not apply to losses occurring in 2010 and later years. Instead, these losses are subject to the 10%-of-AGI limit and are deductible only if you itemize your deductions. These losses continue to be subject to the $100-per-loss limit.
EIC
At the time this publication went to print, Congress was considering legislation that would do the following.
  • Increase the personal casualty and theft loss limit to the excess of the loss over $500 (instead of $100).
  • In the case of federally declared disaster area losses occurring in 2010, the net disaster loss would be exempt from the 10%-of-adjusted-gross-income limit and be deductible even if you do not itemize your deductions.
To find out whether the legislation has been enacted, go to IRS.gov.
taxmap/pub17/p17-133.htm#TXMP23018267
This chapter explains the tax treatment of personal (not business or investment related) casualty losses, theft losses, and losses on deposits.
The chapter also explains the following 
topics.
taxmap/pub17/p17-133.htm#en_us_publink1000173527

Forms to file.(p166)

rule
When you have a casualty or theft, you have to file Form 4684. You will also have to file one or more of the following forms.
taxmap/pub17/p17-133.htm#en_us_publink1000173528

Condemnations.(p166)

rule
For information on condemnations of property, see Involuntary Conversions in chapter 1 of Publication 544.
taxmap/pub17/p17-133.htm#en_us_publink1000173529

Workbook for casualties and thefts.(p166)

rule
Publication 584 is available to help you make a list of your stolen or damaged personal-use property and figure your loss. It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles.
taxmap/pub17/p17-133.htm#en_us_publink1000173530

Other sources of information.(p166)

rule
For information on a casualty or theft loss of business or income-producing property, see Publication 547.

taxmap/pub17/p17-133.htm#TXMP76634fec

Useful items

You may want to see:


Publication
 544 Sales and Other Dispositions 
of Assets

 547 Casualties, Disasters, and  
Thefts

 584 Casualty, Disaster, and Theft  
Loss Workbook (Personal-Use 
Property)

Form (and Instructions)
 Schedule A (Form 1040): Itemized Deductions
 Schedule D (Form 1040): Capital Gains and Losses
 Schedule L (Form 1040A or 1040): Standard Deduction for Certain Filers
 4684: Casualties and Thefts
taxmap/pub17/p17-133.htm#en_us_publink1000173531

Casualty(p166)

rule
A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual.
taxmap/pub17/p17-133.htm#en_us_publink1000173532

Deductible losses.(p166)

rule
Deductible casualty losses can result from a number of different causes, including the following.
taxmap/pub17/p17-133.htm#en_us_publink1000173535

Nondeductible losses.(p167)

rule
A casualty loss is not deductible if the damage or destruction is caused by the following.
taxmap/pub17/p17-133.htm#en_us_publink1000173536
Family pet.(p167)
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.
taxmap/pub17/p17-133.htm#en_us_publink1000173537

Example.(p167)

Your antique oriental rug was damaged by your new puppy before it was housebroken. Because the damage was not unexpected and unusual, the loss is not deductible as a casualty loss.
taxmap/pub17/p17-133.htm#en_us_publink1000173538
Progressive deterioration.(p167)
Loss of property due to progressive deterioration is not deductible as a casualty loss. This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. The following are examples of damage due to progressive deterioration.