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1040a 2012 Tax Return

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1040a 2012 Tax Return

1040a 2012 tax return Publication 526 - Main Content Table of Contents Organizations That Qualify To Receive Deductible ContributionsTypes of Qualified Organizations Contributions You Can DeductContributions From Which You Benefit Expenses Paid for Student Living With You Out-of-Pocket Expenses in Giving Services Expenses of Whaling Captains Contributions You Cannot DeductContributions to Individuals Contributions to Nonqualified Organizations Contributions From Which You Benefit Value of Time or Services Personal Expenses Appraisal Fees Contributions to Donor-Advised Funds Partial Interest in Property Contributions of PropertyContributions Subject to Special Rules Determining Fair Market Value Giving Property That Has Decreased in Value Giving Property That Has Increased in Value Penalty When To DeductChecks. 1040a 2012 tax return Text message. 1040a 2012 tax return Credit card. 1040a 2012 tax return Pay-by-phone account. 1040a 2012 tax return Stock certificate. 1040a 2012 tax return Promissory note. 1040a 2012 tax return Option. 1040a 2012 tax return Borrowed funds. 1040a 2012 tax return Conditional gift. 1040a 2012 tax return Limits on Deductions50% Limit 30% Limit Special 30% Limit for Capital Gain Property 20% Limit Special 50% Limit for Qualified Conservation Contributions How To Figure Your Deduction When Limits Apply Records To KeepCash Contributions Noncash Contributions Out-of-Pocket Expenses How To ReportReporting expenses for student living with you. 1040a 2012 tax return Total deduction over $500. 1040a 2012 tax return Deduction over $5,000 for one item. 1040a 2012 tax return Vehicle donations. 1040a 2012 tax return Clothing and household items not in good used condition. 1040a 2012 tax return Easement on building in historic district. 1040a 2012 tax return Deduction over $500,000. 1040a 2012 tax return How To Get Tax HelpLow Income Taxpayer Clinics Organizations That Qualify To Receive Deductible Contributions You can deduct your contributions only if you make them to a qualified organization. 1040a 2012 tax return Most organizations, other than churches and governments, must apply to the IRS to become a qualified organization. 1040a 2012 tax return How to check whether an organization can receive deductible charitable contributions. 1040a 2012 tax return   You can ask any organization whether it is a qualified organization, and most will be able to tell you. 1040a 2012 tax return Or go to IRS. 1040a 2012 tax return gov. 1040a 2012 tax return Click on “Tools” and then on “Exempt Organizations Select Check” (www. 1040a 2012 tax return irs. 1040a 2012 tax return gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check). 1040a 2012 tax return This online tool will enable you to search for qualified organizations. 1040a 2012 tax return You can also call the IRS to find out if an organization is qualified. 1040a 2012 tax return Call 1-877-829-5500. 1040a 2012 tax return People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 1-800-829-4059. 1040a 2012 tax return Deaf or hard of hearing individuals can also contact the IRS through relay services such as the Federal Relay Service at www. 1040a 2012 tax return gsa. 1040a 2012 tax return gov/fedrelay. 1040a 2012 tax return Types of Qualified Organizations Generally, only the following types of organizations can be qualified organizations. 1040a 2012 tax return A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). 1040a 2012 tax return It must, however, be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. 1040a 2012 tax return Certain organizations that foster national or international amateur sports competition also qualify. 1040a 2012 tax return War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico). 1040a 2012 tax return Domestic fraternal societies, orders, and associations operating under the lodge system. 1040a 2012 tax return (Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. 1040a 2012 tax return ) Certain nonprofit cemetery companies or corporations. 1040a 2012 tax return (Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum crypt. 1040a 2012 tax return ) The United States or any state, the District of Columbia, a U. 1040a 2012 tax return S. 1040a 2012 tax return possession (including Puerto Rico), a political subdivision of a state or U. 1040a 2012 tax return S. 1040a 2012 tax return possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions. 1040a 2012 tax return (Your contribution to this type of organization is deductible only if it is to be used solely for public purposes. 1040a 2012 tax return ) Example 1. 1040a 2012 tax return You contribute cash to your city's police department to be used as a reward for information about a crime. 1040a 2012 tax return The city police department is a qualified organization, and your contribution is for a public purpose. 1040a 2012 tax return You can deduct your contribution. 1040a 2012 tax return Example 2. 1040a 2012 tax return You make a voluntary contribution to the social security trust fund, not earmarked for a specific account. 1040a 2012 tax return Because the trust fund is part of the U. 1040a 2012 tax return S. 1040a 2012 tax return Government, you contributed to a qualified organization. 1040a 2012 tax return You can deduct your contribution. 1040a 2012 tax return Examples. 1040a 2012 tax return   The following list gives some examples of qualified organizations. 1040a 2012 tax return Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations. 1040a 2012 tax return Most nonprofit charitable organizations such as the American Red Cross and the United Way. 1040a 2012 tax return Most nonprofit educational organizations, including the Boy Scouts of America, Girl Scouts of America, colleges, and museums. 1040a 2012 tax return This also includes nonprofit daycare centers that provide childcare to the general public if substantially all the childcare is provided to enable parents and guardians to be gainfully employed. 1040a 2012 tax return However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct . 1040a 2012 tax return Nonprofit hospitals and medical research organizations. 1040a 2012 tax return Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs. 1040a 2012 tax return Nonprofit volunteer fire companies. 1040a 2012 tax return Nonprofit organizations that develop and maintain public parks and recreation facilities. 1040a 2012 tax return Civil defense organizations. 1040a 2012 tax return Canadian charities. 1040a 2012 tax return   You may be able to deduct contributions to certain Canadian charitable organizations covered under an income tax treaty with Canada. 1040a 2012 tax return To deduct your contribution to a Canadian charity, you generally must have income from sources in Canada. 1040a 2012 tax return See Publication 597, Information on the United States-Canada Income Tax Treaty, for information on how to figure your deduction. 1040a 2012 tax return Mexican charities. 1040a 2012 tax return   Under the U. 1040a 2012 tax return S. 1040a 2012 tax return -Mexico income tax treaty, a contribution to a Mexican charitable organization may be deductible, but only if and to the extent the contribution would have been treated as a charitable contribution to a public charity created or organized under U. 1040a 2012 tax return S. 1040a 2012 tax return law. 1040a 2012 tax return To deduct your contribution to a Mexican charity, you must have income from sources in Mexico. 1040a 2012 tax return The limits described in Limits on Deductions , later, apply and are figured using your income from Mexican sources. 1040a 2012 tax return Israeli charities. 1040a 2012 tax return   Under the U. 1040a 2012 tax return S. 1040a 2012 tax return -Israel income tax treaty, a contribution to an Israeli charitable organization is deductible if and to the extent the contribution would have been treated as a charitable contribution if the organization had been created or organized under U. 1040a 2012 tax return S. 1040a 2012 tax return law. 1040a 2012 tax return To deduct your contribution to an Israeli charity, you must have income from sources in Israel. 1040a 2012 tax return The limits described in Limits on Deductions , later, apply. 1040a 2012 tax return The deduction is also limited to 25% of your adjusted gross income from Israeli sources. 1040a 2012 tax return Contributions You Can Deduct Generally, you can deduct contributions of money or property you make to, or for the use of, a qualified organization. 1040a 2012 tax return A contribution is “for the use of” a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement. 1040a 2012 tax return The contributions must be made to a qualified organization and not set aside for use by a specific person. 1040a 2012 tax return If you give property to a qualified organization, you generally can deduct the fair market value of the property at the time of the contribution. 1040a 2012 tax return See Contributions of Property , later. 1040a 2012 tax return Your deduction for charitable contributions generally cannot be more than 50% of your adjusted gross income (AGI), but in some cases 20% and 30% limits may apply. 1040a 2012 tax return In addition, the total of your charitable contributions deduction and certain other itemized deductions may be limited. 1040a 2012 tax return See Limits on Deductions , later. 1040a 2012 tax return Table 1 in this publication gives examples of contributions you can and cannot deduct. 1040a 2012 tax return Contributions From Which You Benefit If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. 1040a 2012 tax return Also see Contributions From Which You Benefit under Contributions You Cannot Deduct, later. 1040a 2012 tax return If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. 1040a 2012 tax return For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. 1040a 2012 tax return Example 1. 1040a 2012 tax return You pay $65 for a ticket to a dinner-dance at a church. 1040a 2012 tax return Your entire $65 payment goes to the church. 1040a 2012 tax return The ticket to the dinner-dance has a fair market value of $25. 1040a 2012 tax return When you buy your ticket, you know its value is less than your payment. 1040a 2012 tax return To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from your total payment ($65). 1040a 2012 tax return You can deduct $40 as a charitable contribution to the church. 1040a 2012 tax return Example 2. 1040a 2012 tax return At a fundraising auction conducted by a charity, you pay $600 for a week's stay at a beach house. 1040a 2012 tax return The amount you pay is no more than the fair rental value. 1040a 2012 tax return You have not made a deductible charitable contribution. 1040a 2012 tax return Athletic events. 1040a 2012 tax return   If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic event in the athletic stadium of the college or university, you can deduct 80% of the payment as a charitable contribution. 1040a 2012 tax return   If any part of your payment is for tickets (rather than the right to buy tickets), that part is not deductible. 1040a 2012 tax return Subtract the price of the tickets from your payment. 1040a 2012 tax return You can deduct 80% of the remaining amount as a charitable contribution. 1040a 2012 tax return Example 1. 1040a 2012 tax return You pay $300 a year for membership in a university's athletic scholarship program. 1040a 2012 tax return The only benefit of membership is that you have the right to buy one season ticket for a seat in a designated area of the stadium at the university's home football games. 1040a 2012 tax return You can deduct $240 (80% of $300) as a charitable contribution. 1040a 2012 tax return Example 2. 1040a 2012 tax return The facts are the same as in Example 1 except your $300 payment includes the purchase of one season ticket for the stated ticket price of $120. 1040a 2012 tax return You must subtract the usual price of a ticket ($120) from your $300 payment. 1040a 2012 tax return The result is $180. 1040a 2012 tax return Your deductible charitable contribution is $144 (80% of $180). 1040a 2012 tax return Charity benefit events. 1040a 2012 tax return   If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive. 1040a 2012 tax return   If there is an established charge for the event, that charge is the value of your benefit. 1040a 2012 tax return If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit. 1040a 2012 tax return Whether you use the tickets or other privileges has no effect on the amount you can deduct. 1040a 2012 tax return However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount you paid for the ticket. 1040a 2012 tax return    Even if the ticket or other evidence of payment indicates that the payment is a “contribution,” this does not mean you can deduct the entire amount. 1040a 2012 tax return If the ticket shows the price of admission and the amount of the contribution, you can deduct the contribution amount. 1040a 2012 tax return Example. 1040a 2012 tax return You pay $40 to see a special showing of a movie for the benefit of a qualified organization. 1040a 2012 tax return Printed on the ticket is “Contribution–$40. 1040a 2012 tax return ” If the regular price for the movie is $8, your contribution is $32 ($40 payment − $8 regular price). 1040a 2012 tax return Membership fees or dues. 1040a 2012 tax return   You may be able to deduct membership fees or dues you pay to a qualified organization. 1040a 2012 tax return However, you can deduct only the amount that is more than the value of the benefits you receive. 1040a 2012 tax return   You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations. 1040a 2012 tax return They are not qualified organizations. 1040a 2012 tax return Certain membership benefits can be disregarded. 1040a 2012 tax return   Both you and the organization can disregard the following membership benefits if you get them in return for an annual payment of $75 or less. 1040a 2012 tax return Any rights or privileges, other than those discussed under Athletic events , earlier, that you can use frequently while you are a member, such as: Free or discounted admission to the organization's facilities or events, Free or discounted parking, Preferred access to goods or services, and Discounts on the purchase of goods and services. 1040a 2012 tax return Admission, while you are a member, to events open only to members of the organization if the organization reasonably projects that the cost per person (excluding any allocated overhead) is not more than $10. 1040a 2012 tax return 20. 1040a 2012 tax return Token items. 1040a 2012 tax return   You do not have to reduce your contribution by the value of any benefit you receive if both of the following are true. 1040a 2012 tax return You receive only a small item or other benefit of token value. 1040a 2012 tax return The qualified organization correctly determines that the value of the item or benefit you received is not substantial and informs you that you can deduct your payment in full. 1040a 2012 tax return The organization determines whether the value of an item or benefit is substantial by using Revenue Procedures 90-12 and 92-49 and the inflation adjustment in Revenue Procedure 2012–41. 1040a 2012 tax return Written statement. 1040a 2012 tax return   A qualified organization must give you a written statement if you make a payment of more than $75 that is partly a contribution and partly for goods or services. 1040a 2012 tax return The statement must say you can deduct only the amount of your payment that is more than the value of the goods or services you received. 1040a 2012 tax return It must also give you a good faith estimate of the value of those goods or services. 1040a 2012 tax return   The organization can give you the statement either when it solicits or when it receives the payment from you. 1040a 2012 tax return Exception. 1040a 2012 tax return   An organization will not have to give you this statement if one of the following is true. 1040a 2012 tax return The organization is: A governmental organization described in (5) under Types of Qualified Organizations , earlier, or An organization formed only for religious purposes, and the only benefit you receive is an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in commercial transactions outside the donative context. 1040a 2012 tax return You receive only items whose value is not substantial as described under Token items , earlier. 1040a 2012 tax return You receive only membership benefits that can be disregarded, as described under Membership fees or dues , earlier. 1040a 2012 tax return Expenses Paid for Student Living With You You may be able to deduct some expenses of having a student live with you. 1040a 2012 tax return You can deduct qualifying expenses for a foreign or American student who: Lives in your home under a written agreement between you and a qualified organization (defined later) as part of a program of the organization to provide educational opportunities for the student, Is not your relative (defined later) or dependent (also defined later), and Is a full-time student in the twelfth or any lower grade at a school in the United States. 1040a 2012 tax return You can deduct up to $50 a month for each full calendar month the student lives with you. 1040a 2012 tax return Any month when conditions (1) through (3) above are met for 15 or more days counts as a full month. 1040a 2012 tax return Qualified organization. 1040a 2012 tax return   For these purposes, a qualified organization can be any of the organizations described earlier under Types of Qualified Organizations , except those in (4) and (5). 1040a 2012 tax return For example, if you are providing a home for a student as part of a state or local government program, you cannot deduct your expenses as charitable contributions. 1040a 2012 tax return But see Foster parents under Out-of-Pocket Expenses in Giving Services, later, if you provide the home as a foster parent. 1040a 2012 tax return Relative. 1040a 2012 tax return   The term “relative” means any of the following persons. 1040a 2012 tax return Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). 1040a 2012 tax return A legally adopted child is considered your child. 1040a 2012 tax return Your brother, sister, half brother, half sister, stepbrother, or stepsister. 1040a 2012 tax return Your father, mother, grandparent, or other direct ancestor. 1040a 2012 tax return Your stepfather or stepmother. 1040a 2012 tax return A son or daughter of your brother or sister. 1040a 2012 tax return A brother or sister of your father or mother. 1040a 2012 tax return Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. 1040a 2012 tax return Dependent. 1040a 2012 tax return   For this purpose, the term “dependent” means: A person you can claim as a dependent, or A person you could have claimed as a dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. 1040a 2012 tax return    Foreign students brought to this country under a qualified international education exchange program and placed in American homes for a temporary period generally are not U. 1040a 2012 tax return S. 1040a 2012 tax return residents and cannot be claimed as dependents. 1040a 2012 tax return Qualifying expenses. 1040a 2012 tax return   You may be able to deduct the cost of books, tuition, food, clothing, transportation, medical and dental care, entertainment, and other amounts you actually spend for the well-being of the student. 1040a 2012 tax return Expenses that do not qualify. 1040a 2012 tax return   You cannot deduct depreciation on your home, the fair market value of lodging, and similar items not considered amounts actually spent by you. 1040a 2012 tax return Nor can you deduct general household expenses, such as taxes, insurance, and repairs. 1040a 2012 tax return Reimbursed expenses. 1040a 2012 tax return   In most cases, you cannot claim a charitable contribution deduction if you are compensated or reimbursed for any part of the costs of having a student live with you. 1040a 2012 tax return However, you may be able to claim a charitable contribution deduction for the unreimbursed portion of your expenses if you are reimbursed only for an extraordinary or one-time item, such as a hospital bill or vacation trip, you paid in advance at the request of the student's parents or the sponsoring organization. 1040a 2012 tax return Mutual exchange program. 1040a 2012 tax return   You cannot deduct the costs of a foreign student living in your home under a mutual exchange program through which your child will live with a family in a foreign country. 1040a 2012 tax return Reporting expenses. 1040a 2012 tax return   For a list of what you must file with your return if you deduct expenses for a student living with you, see Reporting expenses for student living with you under How To Report, later. 1040a 2012 tax return Out-of-Pocket Expenses in Giving Services Table 2. 1040a 2012 tax return Volunteers' Questions and Answers If you volunteer for a qualified organization, the following questions and answers may apply to you. 1040a 2012 tax return All of the rules explained in this publication also apply. 1040a 2012 tax return See, in particular, Out-of-Pocket Expenses in Giving Services . 1040a 2012 tax return Question Answer I volunteer 6 hours a week in the office of a qualified organization. 1040a 2012 tax return The receptionist is paid $10 an hour for the same work. 1040a 2012 tax return Can I deduct $60 a week for my time? No, you cannot deduct the value of your time or services. 1040a 2012 tax return  The office is 30 miles from my home. 1040a 2012 tax return Can I deduct any of my car expenses for these trips? Yes, you can deduct the costs of gas and oil that are directly related to getting to and from the place where you volunteer. 1040a 2012 tax return If you do not want to figure your actual costs, you can deduct 14 cents for each mile. 1040a 2012 tax return I volunteer as a Red Cross nurse's aide at a hospital. 1040a 2012 tax return Can I deduct the cost of the uniforms I must wear? Yes, you can deduct the cost of buying and cleaning your uniforms if the hospital is a qualified organization, the uniforms are not suitable for everyday use, and you must wear them when volunteering. 1040a 2012 tax return I pay a babysitter to watch my children while I volunteer for a qualified organization. 1040a 2012 tax return Can I deduct these costs? No, you cannot deduct payments for childcare expenses as a charitable contribution, even if you would be unable to volunteer without childcare. 1040a 2012 tax return (If you have childcare expenses so you can work for pay, see Publication 503, Child and Dependent Care Expenses. 1040a 2012 tax return ) Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. 1040a 2012 tax return The amounts must be: Unreimbursed, Directly connected with the services, Expenses you had only because of the services you gave, and Not personal, living, or family expenses. 1040a 2012 tax return Table 2 contains questions and answers that apply to some individuals who volunteer their services. 1040a 2012 tax return Underprivileged youths selected by charity. 1040a 2012 tax return   You can deduct reasonable unreimbursed out-of-pocket expenses you pay to allow underprivileged youths to attend athletic events, movies, or dinners. 1040a 2012 tax return The youths must be selected by a charitable organization whose goal is to reduce juvenile delinquency. 1040a 2012 tax return Your own similar expenses in accompanying the youths are not deductible. 1040a 2012 tax return Conventions. 1040a 2012 tax return   If a qualified organization selects you to attend a convention as its representative, you can deduct your unreimbursed expenses for travel, including reasonable amounts for meals and lodging, while away from home overnight for the convention. 1040a 2012 tax return However, see Travel , later. 1040a 2012 tax return   You cannot deduct personal expenses for sightseeing, fishing parties, theater tickets, or nightclubs. 1040a 2012 tax return You also cannot deduct travel, meals and lodging, and other expenses for your spouse or children. 1040a 2012 tax return   You cannot deduct your travel expenses in attending a church convention if you go only as a member of your church rather than as a chosen representative. 1040a 2012 tax return You can, however, deduct unreimbursed expenses that are directly connected with giving services for your church during the convention. 1040a 2012 tax return Uniforms. 1040a 2012 tax return   You can deduct the cost and upkeep of uniforms that are not suitable for everyday use and that you must wear while performing donated services for a charitable organization. 1040a 2012 tax return Foster parents. 1040a 2012 tax return   You may be able to deduct as a charitable contribution some of the costs of being a foster parent (foster care provider) if you have no profit motive in providing the foster care and are not, in fact, making a profit. 1040a 2012 tax return A qualified organization must select the individuals you take into your home for foster care. 1040a 2012 tax return   You can deduct expenses that meet both of the following requirements. 1040a 2012 tax return They are unreimbursed out-of-pocket expenses to feed, clothe, and care for the foster child. 1040a 2012 tax return They are incurred primarily to benefit the qualified organization. 1040a 2012 tax return   Unreimbursed expenses that you cannot deduct as charitable contributions may be considered support provided by you in determining whether you can claim the foster child as a dependent. 1040a 2012 tax return For details, see Publication 501, Exemptions, Standard Deduction, and Filing Information. 1040a 2012 tax return Example. 1040a 2012 tax return You cared for a foster child because you wanted to adopt her, not to benefit the agency that placed her in your home. 1040a 2012 tax return Your unreimbursed expenses are not deductible as charitable contributions. 1040a 2012 tax return Church deacon. 1040a 2012 tax return   You can deduct as a charitable contribution any unreimbursed expenses you have while in a permanent diaconate program established by your church. 1040a 2012 tax return These expenses include the cost of vestments, books, and transportation required in order to serve in the program as either a deacon candidate or an ordained deacon. 1040a 2012 tax return Car expenses. 1040a 2012 tax return   You can deduct as a charitable contribution any unreimbursed out-of-pocket expenses, such as the cost of gas and oil, directly related to the use of your car in giving services to a charitable organization. 1040a 2012 tax return You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance. 1040a 2012 tax return   If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution. 1040a 2012 tax return   You can deduct parking fees and tolls whether you use your actual expenses or the standard mileage rate. 1040a 2012 tax return   You must keep reliable written records of your car expenses. 1040a 2012 tax return For more information, see Car expenses under Records To Keep, later. 1040a 2012 tax return Travel. 1040a 2012 tax return   Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. 1040a 2012 tax return This applies whether you pay the expenses directly or indirectly. 1040a 2012 tax return You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses. 1040a 2012 tax return   The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. 1040a 2012 tax return Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip. 1040a 2012 tax return However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel expenses. 1040a 2012 tax return Example 1. 1040a 2012 tax return You are a troop leader for a tax-exempt youth group and you take the group on a camping trip. 1040a 2012 tax return You are responsible for overseeing the setup of the camp and for providing adult supervision for other activities during the entire trip. 1040a 2012 tax return You participate in the activities of the group and enjoy your time with them. 1040a 2012 tax return You oversee the breaking of camp and you transport the group home. 1040a 2012 tax return You can deduct your travel expenses. 1040a 2012 tax return Example 2. 1040a 2012 tax return You sail from one island to another and spend 8 hours a day counting whales and other forms of marine life. 1040a 2012 tax return The project is sponsored by a charitable organization. 1040a 2012 tax return In most circumstances, you cannot deduct your expenses. 1040a 2012 tax return Example 3. 1040a 2012 tax return You work for several hours each morning on an archeological dig sponsored by a charitable organization. 1040a 2012 tax return The rest of the day is free for recreation and sightseeing. 1040a 2012 tax return You cannot take a charitable contribution deduction even though you work very hard during those few hours. 1040a 2012 tax return Example 4. 1040a 2012 tax return You spend the entire day attending a charitable organization's regional meeting as a chosen representative. 1040a 2012 tax return In the evening you go to the theater. 1040a 2012 tax return You can claim your travel expenses as charitable contributions, but you cannot claim the cost of your evening at the theater. 1040a 2012 tax return Daily allowance (per diem). 1040a 2012 tax return   If you provide services for a charitable organization and receive a daily allowance to cover reasonable travel expenses, including meals and lodging while away from home overnight, you must include in income any part of the allowance that is more than your deductible travel expenses. 1040a 2012 tax return You may be able to deduct any necessary travel expenses that are more than the allowance. 1040a 2012 tax return Deductible travel expenses. 1040a 2012 tax return   These include: Air, rail, and bus transportation, Out-of-pocket expenses for your car, Taxi fares or other costs of transportation between the airport or station and your hotel, Lodging costs, and The cost of meals. 1040a 2012 tax return Because these travel expenses are not business-related, they are not subject to the same limits as business related expenses. 1040a 2012 tax return For information on business travel expenses, see Travel in Publication 463, Travel, Entertainment, Gift, and Car Expenses. 1040a 2012 tax return Expenses of Whaling Captains You may be able to deduct as a charitable contribution any reasonable and necessary whaling expenses you pay during the year to carry out sanctioned whaling activities. 1040a 2012 tax return The deduction is limited to $10,000 a year. 1040a 2012 tax return To claim the deduction, you must be recognized by the Alaska Eskimo Whaling Commission as a whaling captain charged with the responsibility of maintaining and carrying out sanctioned whaling activities. 1040a 2012 tax return Sanctioned whaling activities are subsistence bowhead whale hunting activities conducted under the management plan of the Alaska Eskimo Whaling Commission. 1040a 2012 tax return Whaling expenses include expenses for: Acquiring and maintaining whaling boats, weapons, and gear used in sanctioned whaling activities, Supplying food for the crew and other provisions for carrying out these activities, and Storing and distributing the catch from these activities. 1040a 2012 tax return You must keep records showing the time, place, date, amount, and nature of the expenses. 1040a 2012 tax return For details, see Revenue Procedure 2006-50, which is on page 944 of Internal Revenue Bulletin 2006-47 at www. 1040a 2012 tax return irs. 1040a 2012 tax return gov/pub/irs-irbs/irb06-47. 1040a 2012 tax return pdf. 1040a 2012 tax return Contributions You Cannot Deduct There are some contributions you cannot deduct and others you can deduct only in part. 1040a 2012 tax return You cannot deduct as a charitable contribution: A contribution to a specific individual, A contribution to a nonqualified organization, The part of a contribution from which you receive or expect to receive a benefit, The value of your time or services, Your personal expenses, A qualified charitable distribution from an individual retirement arrangement (IRA), Appraisal fees, Certain contributions to donor-advised funds, or Certain contributions of partial interests in property. 1040a 2012 tax return Detailed discussions of these items follow. 1040a 2012 tax return Contributions to Individuals You cannot deduct contributions to specific individuals, including the following. 1040a 2012 tax return Contributions to fraternal societies made for the purpose of paying medical or burial expenses of members. 1040a 2012 tax return Contributions to individuals who are needy or worthy. 1040a 2012 tax return You cannot deduct these contributions even if you make them to a qualified organization for the benefit of a specific person. 1040a 2012 tax return But you can deduct a contribution to a qualified organization that helps needy or worthy individuals if you do not indicate that your contribution is for a specific person. 1040a 2012 tax return Example. 1040a 2012 tax return You can deduct contributions to a qualified organization for flood relief, hurricane relief, or other disaster relief. 1040a 2012 tax return However, you cannot deduct contributions earmarked for relief of a particular individual or family. 1040a 2012 tax return Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses. 1040a 2012 tax return Expenses you paid for another person who provided services to a qualified organization. 1040a 2012 tax return Example. 1040a 2012 tax return Your son does missionary work. 1040a 2012 tax return You pay his expenses. 1040a 2012 tax return You cannot claim a deduction for your son's unreimbursed expenses related to his contribution of services. 1040a 2012 tax return Payments to a hospital that are for a specific patient's care or for services for a specific patient. 1040a 2012 tax return You cannot deduct these payments even if the hospital is operated by a city, state, or other qualified organization. 1040a 2012 tax return Contributions to Nonqualified Organizations You cannot deduct contributions to organizations that are not qualified to receive tax-deductible contributions, including the following. 1040a 2012 tax return Certain state bar associations if: The bar is not a political subdivision of a state, The bar has private, as well as public, purposes, such as promoting the professional interests of members, and Your contribution is unrestricted and can be used for private purposes. 1040a 2012 tax return Chambers of commerce and other business leagues or organizations. 1040a 2012 tax return Civic leagues and associations. 1040a 2012 tax return Communist organizations. 1040a 2012 tax return Country clubs and other social clubs. 1040a 2012 tax return Foreign organizations other than certain Canadian, Israeli, or Mexican charitable organizations. 1040a 2012 tax return (See Canadian charities , Mexican charities , and Israeli charities under Organizations That Qualify To Receive Deductible Contributions, earlier. 1040a 2012 tax return ) Also, you cannot deduct a contribution you made to any qualifying organization if the contribution is earmarked to go to a foreign organization. 1040a 2012 tax return However, certain contributions to a qualified organization for use in a program conducted by a foreign charity may be deductible as long as they are not earmarked to go to the foreign charity. 1040a 2012 tax return For the contribution to be deductible, the qualified organization must approve the program as furthering its own exempt purposes and must keep control over the use of the contributed funds. 1040a 2012 tax return The contribution is also deductible if the foreign charity is only an administrative arm of the qualified organization. 1040a 2012 tax return Homeowners' associations. 1040a 2012 tax return Labor unions. 1040a 2012 tax return But you may be able to deduct union dues as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). 1040a 2012 tax return See Publication 529, Miscellaneous Deductions. 1040a 2012 tax return Political organizations and candidates. 1040a 2012 tax return Contributions From Which You Benefit If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you cannot deduct the part of the contribution that represents the value of the benefit you receive. 1040a 2012 tax return See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. 1040a 2012 tax return These contributions include the following. 1040a 2012 tax return Contributions for lobbying. 1040a 2012 tax return This includes amounts you earmark for use in, or in connection with, influencing specific legislation. 1040a 2012 tax return Contributions to a retirement home for room, board, maintenance, or admittance. 1040a 2012 tax return Also, if the amount of your contribution depends on the type or size of apartment you will occupy, it is not a charitable contribution. 1040a 2012 tax return Costs of raffles, bingo, lottery, etc. 1040a 2012 tax return You cannot deduct as a charitable contribution amounts you pay to buy raffle or lottery tickets or to play bingo or other games of chance. 1040a 2012 tax return For information on how to report gambling winnings and losses, see Deductions Not Subject to the 2% Limit in Publication 529. 1040a 2012 tax return Dues to fraternal orders and similar groups. 1040a 2012 tax return However, see Membership fees or dues under Contributions From Which You Benefit, earlier. 1040a 2012 tax return Tuition, or amounts you pay instead of tuition. 1040a 2012 tax return You cannot deduct as a charitable contribution amounts you pay as tuition even if you pay them for children to attend parochial schools or qualifying nonprofit daycare centers. 1040a 2012 tax return You also cannot deduct any fixed amount you must pay in addition to, or instead of, tuition to enroll in a private school, even if it is designated as a “donation. 1040a 2012 tax return ” Contributions connected with split-dollar insurance arrangements. 1040a 2012 tax return You cannot deduct any part of a contribution to a charitable organization if, in connection with the contribution, the organization directly or indirectly pays, has paid, or is expected to pay any premium on any life insurance, annuity, or endowment contract for which you, any member of your family, or any other person chosen by you (other than a qualified charitable organization) is a beneficiary. 1040a 2012 tax return Example. 1040a 2012 tax return You donate money to a charitable organization. 1040a 2012 tax return The charity uses the money to purchase a cash value life insurance policy. 1040a 2012 tax return The beneficiaries under the insurance policy include members of your family. 1040a 2012 tax return Even though the charity may eventually get some benefit out of the insurance policy, you cannot deduct any part of the donation. 1040a 2012 tax return Qualified Charitable Distributions A qualified charitable distribution (QCD) is a distribution made directly by the trustee of your individual retirement arrangement (IRA), other than a SEP or SIMPLE IRA, to certain qualified organizations. 1040a 2012 tax return You must have been at least age 70½ when the distribution was made. 1040a 2012 tax return Your total QCDs for the year cannot be more than $100,000. 1040a 2012 tax return If all the requirements are met, a QCD is nontaxable, but you cannot claim a charitable contribution deduction for a QCD. 1040a 2012 tax return See Publication 590, Individual Retirement Arrangements (IRAs), for more information about QCDs. 1040a 2012 tax return Value of Time or Services You cannot deduct the value of your time or services, including: Blood donations to the American Red Cross or to blood banks, and The value of income lost while you work as an unpaid volunteer for a qualified organization. 1040a 2012 tax return Personal Expenses You cannot deduct personal, living, or family expenses, such as the following items. 1040a 2012 tax return The cost of meals you eat while you perform services for a qualified organization, unless it is necessary for you to be away from home overnight while performing the services. 1040a 2012 tax return Adoption expenses, including fees paid to an adoption agency and the costs of keeping a child in your home before adoption is final. 1040a 2012 tax return However, you may be able to claim a tax credit for these expenses. 1040a 2012 tax return Also, you may be able to exclude from your gross income amounts paid or reimbursed by your employer for your adoption expenses. 1040a 2012 tax return See Form 8839, Qualified Adoption Expenses, and its instructions, for more information. 1040a 2012 tax return You also may be able to claim an exemption for the child. 1040a 2012 tax return See Exemptions for Dependents in Publication 501 for more information. 1040a 2012 tax return Appraisal Fees You cannot deduct as a charitable contribution any fees you pay to find the fair market value of donated property. 1040a 2012 tax return But you can claim them, subject to the 2%-of-adjusted-gross-income limit, as a miscellaneous itemized deduction on Schedule A (Form 1040). 1040a 2012 tax return See Deductions Subject to the 2% Limit in Publication 529 for more information. 1040a 2012 tax return Contributions to Donor-Advised Funds You cannot deduct a contribution to a donor-advised fund if: The qualified organization that sponsors the fund is a war veterans' organization, a fraternal society, or a nonprofit cemetery company, or You do not have an acknowledgment from that sponsoring organization that it has exclusive legal control over the assets contributed. 1040a 2012 tax return There are also other circumstances in which you cannot deduct your contribution to a donor-advised fund. 1040a 2012 tax return Generally, a donor-advised fund is a fund or account in which a donor can, because of being a donor, advise the fund how to distribute or invest amounts held in the fund. 1040a 2012 tax return For details, see Internal Revenue Code section 170(f)(18). 1040a 2012 tax return Partial Interest in Property Generally, you cannot deduct a contribution of less than your entire interest in property. 1040a 2012 tax return For details, see Partial Interest in Property under Contributions of Property, later. 1040a 2012 tax return Contributions of Property If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. 1040a 2012 tax return However, if the property has increased in value, you may have to make some adjustments to the amount of your deduction. 1040a 2012 tax return See Giving Property That Has Increased in Value , later. 1040a 2012 tax return For information about the records you must keep and the information you must furnish with your return if you donate property, see Records To Keep and How To Report , later. 1040a 2012 tax return Contributions Subject to Special Rules Special rules apply if you contribute: Clothing or household items, A car, boat, or airplane, Taxidermy property, Property subject to a debt, A partial interest in property, A fractional interest in tangible personal property, A qualified conservation contribution, A future interest in tangible personal property, Inventory from your business, or A patent or other intellectual property. 1040a 2012 tax return These special rules are described next. 1040a 2012 tax return Clothing and Household Items You cannot take a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better. 1040a 2012 tax return Exception. 1040a 2012 tax return   You can take a deduction for a contribution of an item of clothing or a household item that is not in good used condition or better if you deduct more than $500 for it and include a qualified appraisal of it with your return. 1040a 2012 tax return Household items. 1040a 2012 tax return   Household items include: Furniture and furnishings, Electronics, Appliances, Linens, and Other similar items. 1040a 2012 tax return   Household items do not include: Food, Paintings, antiques, and other objects of art, Jewelry and gems, and Collections. 1040a 2012 tax return Fair market value. 1040a 2012 tax return   To determine the fair market value of these items, use the rules under Determining Fair Market Value , later. 1040a 2012 tax return Cars, Boats, and Airplanes The following rules apply to any donation of a qualified vehicle. 1040a 2012 tax return A qualified vehicle is: A car or any motor vehicle manufactured mainly for use on public streets, roads, and highways, A boat, or An airplane. 1040a 2012 tax return Deduction more than $500. 1040a 2012 tax return   If you donate a qualified vehicle with a claimed fair market value of more than $500, you can deduct the smaller of: The gross proceeds from the sale of the vehicle by the organization, or The vehicle's fair market value on the date of the contribution. 1040a 2012 tax return If the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to figure the deductible amount, as described under Giving Property That Has Increased in Value , later. 1040a 2012 tax return Form 1098-C. 1040a 2012 tax return   You must attach to your return Copy B of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, (or other statement containing the same information as Form 1098-C) you received from the organization. 1040a 2012 tax return The Form 1098-C (or other statement) will show the gross proceeds from the sale of the vehicle. 1040a 2012 tax return   If you e-file your return, you must: Attach Copy B of Form 1098-C to Form 8453, U. 1040a 2012 tax return S. 1040a 2012 tax return Individual Income Tax Transmittal for an IRS e-file Return, and mail the forms to the IRS, or Include Copy B of Form 1098-C as a pdf attachment if your software program allows it. 1040a 2012 tax return   If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution. 1040a 2012 tax return    You must get Form 1098-C (or other statement) within 30 days of the sale of the vehicle. 1040a 2012 tax return But if exception 1 or 2 (described later) applies, you must get Form 1098-C (or other statement) within 30 days of your donation. 1040a 2012 tax return Filing deadline approaching and still no Form 1098-C. 1040a 2012 tax return   If the filing deadline is approaching and you still do not have a Form 1098-C, you have two choices. 1040a 2012 tax return Request an automatic 6-month extension of time to file your return. 1040a 2012 tax return You can get this extension by filing Form 4868, Application for Automatic Extension of Time To File U. 1040a 2012 tax return S. 1040a 2012 tax return Individual Income Tax Return. 1040a 2012 tax return For more information, see the instructions for Form 4868. 1040a 2012 tax return File the return on time without claiming the deduction for the qualified vehicle. 1040a 2012 tax return After receiving the Form 1098-C, file an amended return, Form 1040X, Amended U. 1040a 2012 tax return S. 1040a 2012 tax return Individual Income Tax Return, claiming the deduction. 1040a 2012 tax return Attach Copy B of Form 1098-C (or other statement) to the amended return. 1040a 2012 tax return Exceptions. 1040a 2012 tax return   There are two exceptions to the rules just described for deductions of more than $500. 1040a 2012 tax return Exception 1—vehicle used or improved by organization. 1040a 2012 tax return   If the qualified organization makes a significant intervening use of or material improvement to the vehicle before transferring it, you generally can deduct the vehicle's fair market value at the time of the contribution. 1040a 2012 tax return But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. 1040a 2012 tax return The Form 1098-C (or other statement) will show whether this exception applies. 1040a 2012 tax return    Exception 2—vehicle given or sold to needy individual. 1040a 2012 tax return   If the qualified organization will give the vehicle, or sell it for a price well below fair market value, to a needy individual to further the organization's charitable purpose, you generally can deduct the vehicle's fair market value at the time of the contribution. 1040a 2012 tax return But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. 1040a 2012 tax return The Form 1098-C (or other statement) will show whether this exception applies. 1040a 2012 tax return   This exception does not apply if the organization sells the vehicle at auction. 1040a 2012 tax return In that case, you cannot deduct the vehicle's fair market value. 1040a 2012 tax return Example. 1040a 2012 tax return Anita donates a used car to a qualified organization. 1040a 2012 tax return She bought it 3 years ago for $9,000. 1040a 2012 tax return A used car guide shows the fair market value for this type of car is $6,000. 1040a 2012 tax return However, Anita gets a Form 1098-C from the organization showing the car was sold for $2,900. 1040a 2012 tax return Neither exception 1 nor exception 2 applies. 1040a 2012 tax return If Anita itemizes her deductions, she can deduct $2,900 for her donation. 1040a 2012 tax return She must attach Form 1098-C and Form 8283 to her return. 1040a 2012 tax return Deduction $500 or less. 1040a 2012 tax return   If the qualified organization sells the vehicle for $500 or less and exceptions 1 and 2 do not apply, you can deduct the smaller of: $500, or The vehicle's fair market value on the date of the contribution. 1040a 2012 tax return But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. 1040a 2012 tax return   If the vehicle's fair market value is at least $250 but not more than $500, you must have a written statement from the qualified organization acknowledging your donation. 1040a 2012 tax return The statement must contain the information and meet the tests for an acknowledgment described under Contributions of $250 or More under Records To Keep, later. 1040a 2012 tax return Fair market value. 1040a 2012 tax return   To determine a vehicle's fair market value, use the rules described under Determining Fair Market Value , later. 1040a 2012 tax return Donations of inventory. 1040a 2012 tax return   The vehicle donation rules just described do not apply to donations of inventory. 1040a 2012 tax return For example, these rules do not apply if you are a car dealer who donates a car you had been holding for sale to customers. 1040a 2012 tax return See Inventory , later. 1040a 2012 tax return Taxidermy Property If you donate taxidermy property to a qualified organization, your deduction is limited to your basis in the property or its fair market value, whichever is less. 1040a 2012 tax return This applies if you prepared, stuffed, or mounted the property or paid or incurred the cost of preparing, stuffing, or mounting the property. 1040a 2012 tax return Your basis for this purpose includes only the cost of preparing, stuffing, and mounting the property. 1040a 2012 tax return Your basis does not include transportation or travel costs. 1040a 2012 tax return It also does not include the direct or indirect costs for hunting or killing an animal, such as equipment costs. 1040a 2012 tax return In addition, it does not include the value of your time. 1040a 2012 tax return Taxidermy property means any work of art that: Is the reproduction or preservation of an animal, in whole or in part, Is prepared, stuffed, or mounted to recreate one or more characteristics of the animal, and Contains a part of the body of the dead animal. 1040a 2012 tax return Property Subject to a Debt If you contribute property subject to a debt (such as a mortgage), you must reduce the fair market value of the property by: Any allowable deduction for interest you paid (or will pay) that is attributable to any period after the contribution, and If the property is a bond, the lesser of: Any allowable deduction for interest you paid (or will pay) to buy or carry the bond that is attributable to any period before the contribution, or The interest, including bond discount, receivable on the bond that is attributable to any period before the contribution, and that is not includible in your income due to your accounting method. 1040a 2012 tax return This prevents you from deducting the same amount as both investment interest and a charitable contribution. 1040a 2012 tax return If the recipient (or another person) assumes the debt, you must also reduce the fair market value of the property by the amount of the outstanding debt assumed. 1040a 2012 tax return The amount of the debt is also treated as an amount realized on the sale or exchange of property for purposes of figuring your taxable gain (if any). 1040a 2012 tax return For more information, see Bargain Sales under Giving Property That Has Increased in Value, later. 1040a 2012 tax return Partial Interest in Property Generally, you cannot deduct a charitable contribution of less than your entire interest in property. 1040a 2012 tax return Right to use property. 1040a 2012 tax return   A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible. 1040a 2012 tax return Example 1. 1040a 2012 tax return You own a 10-story office building and donate rent-free use of the top floor to a charitable organization. 1040a 2012 tax return Because you still own the building, you have contributed a partial interest in the property and cannot take a deduction for the contribution. 1040a 2012 tax return Example 2. 1040a 2012 tax return Mandy White owns a vacation home at the beach that she sometimes rents to others. 1040a 2012 tax return For a fund-raising auction at her church, she donated the right to use the vacation home for 1 week. 1040a 2012 tax return At the auction, the church received and accepted a bid from Lauren Green equal to the fair rental value of the home for 1 week. 1040a 2012 tax return Mandy cannot claim a deduction because of the partial interest rule. 1040a 2012 tax return Lauren cannot claim a deduction either, because she received a benefit equal to the amount of her payment. 1040a 2012 tax return See Contributions From Which You Benefit , earlier. 1040a 2012 tax return Exceptions. 1040a 2012 tax return   You can deduct a charitable contribution of a partial interest in property only if that interest represents one of the following items. 1040a 2012 tax return A remainder interest in your personal home or farm. 1040a 2012 tax return A remainder interest is one that passes to a beneficiary after the end of an earlier interest in the property. 1040a 2012 tax return Example. 1040a 2012 tax return You keep the right to live in your home during your lifetime and give your church a remainder interest that begins upon your death. 1040a 2012 tax return You can deduct the value of the remainder interest. 1040a 2012 tax return An undivided part of your entire interest. 1040a 2012 tax return This must consist of a part of every substantial interest or right you own in the property and must last as long as your interest in the property lasts. 1040a 2012 tax return But see Fractional Interest in Tangible Personal Property , later. 1040a 2012 tax return Example. 1040a 2012 tax return You contribute voting stock to a qualified organization but keep the right to vote the stock. 1040a 2012 tax return The right to vote is a substantial right in the stock. 1040a 2012 tax return You have not contributed an undivided part of your entire interest and cannot deduct your contribution. 1040a 2012 tax return A partial interest that would be deductible if transferred to certain types of trusts. 1040a 2012 tax return A qualified conservation contribution (defined later). 1040a 2012 tax return For information about how to figure the value of a contribution of a partial interest in property, see Partial Interest in Property Not in Trust in Publication 561. 1040a 2012 tax return Fractional Interest in Tangible Personal Property You cannot deduct a charitable contribution of a fractional interest in tangible personal property unless all interests in the property are held immediately before the contribution by: You, or You and the qualifying organization receiving the contribution. 1040a 2012 tax return If you make an additional contribution later, the fair market value of that contribution will be determined by using the smaller of: The fair market value of the property at the time of the initial contribution, or The fair market value of the property at the time of the additional contribution. 1040a 2012 tax return Tangible personal property is defined later under Future Interest in Tangible Personal Property . 1040a 2012 tax return A fractional interest in property is an undivided portion of your entire interest in the property. 1040a 2012 tax return Example. 1040a 2012 tax return An undivided one-quarter interest in a painting that entitles an art museum to possession of the painting for 3 months of each year is a fractional interest in the property. 1040a 2012 tax return Recapture of deduction. 1040a 2012 tax return   You must recapture your charitable contribution deduction by including it in your income if both of the following statements are true. 1040a 2012 tax return You contributed a fractional interest in tangible personal property after August 17, 2006. 1040a 2012 tax return You do not contribute the rest of your interests in the property to the original recipient or, if it no longer exists, another qualified organization on or before the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. 1040a 2012 tax return   Recapture is also required if the qualified organization has not taken substantial physical possession of the property and used it in a way related to the organization's purpose during the period beginning on the date of the initial contribution and ending on the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. 1040a 2012 tax return Additional tax. 1040a 2012 tax return   If you must recapture your deduction, you must also pay interest and an additional tax equal to 10% of the amount recaptured. 1040a 2012 tax return Qualified Conservation Contribution A qualified conservation contribution is a contribution of a qualified real property interest to a qualified organization to be used only for conservation purposes. 1040a 2012 tax return Qualified organization. 1040a 2012 tax return   For purposes of a qualified conservation contribution, a qualified organization is: A governmental unit, A publicly supported charity, or An organization controlled by, and operated for the exclusive benefit of, a governmental unit or a publicly supported charity. 1040a 2012 tax return The organization also must have a commitment to protect the conservation purposes of the donation and must have the resources to enforce the restrictions. 1040a 2012 tax return   A publicly supported charity is an organization of the type described in (1) under Types of Qualified Organizations , earlier, that normally receives a substantial part of its support, other than income from its exempt activities, from direct or indirect contributions from the general public or from governmental units. 1040a 2012 tax return Qualified real property interest. 1040a 2012 tax return   This is any of the following interests in real property. 1040a 2012 tax return Your entire interest in real estate other than a mineral interest (subsurface oil, gas, or other minerals, and the right of access to these minerals). 1040a 2012 tax return A remainder interest. 1040a 2012 tax return A restriction (granted in perpetuity) on the use that may be made of the real property. 1040a 2012 tax return Conservation purposes. 1040a 2012 tax return   Your contribution must be made only for one of the following conservation purposes. 1040a 2012 tax return Preserving land areas for outdoor recreation by, or for the education of, the general public. 1040a 2012 tax return Protecting a relatively natural habitat of fish, wildlife, or plants, or a similar ecosystem. 1040a 2012 tax return Preserving open space, including farmland and forest land, if it yields a significant public benefit. 1040a 2012 tax return The open space must be preserved either for the scenic enjoyment of the general public or under a clearly defined federal, state, or local governmental conservation policy. 1040a 2012 tax return Preserving a historically important land area or a certified historic structure. 1040a 2012 tax return Building in registered historic district. 1040a 2012 tax return   If a building in a registered historic district is a certified historic structure, a contribution of a qualified real property interest that is an easement or other restriction on the exterior of the building is deductible only if it meets all of the following conditions. 1040a 2012 tax return The restriction must preserve the entire exterior of the building (including its front, sides, rear, and height) and must prohibit any change to the exterior of the building that is inconsistent with its historical character. 1040a 2012 tax return You and the organization receiving the contribution must enter into a written agreement certifying, under penalty of perjury, that the organization: Is a qualified organization with a purpose of environmental protection, land conservation, open space preservation, or historic preservation, and Has the resources to manage and enforce the restriction and a commitment to do so. 1040a 2012 tax return You must include with your return: A qualified appraisal, Photographs of the building's entire exterior, and A description of all restrictions on development of the building, such as zoning laws and restrictive covenants. 1040a 2012 tax return   If you claimed the rehabilitation credit for the building for any of the 5 years before the year of the contribution, your charitable deduction is reduced. 1040a 2012 tax return For more information, see Form 3468, Investment Credit, and Internal Revenue Code section 170(f)(14). 1040a 2012 tax return   If you claim a deduction of more than $10,000, your deduction will not be allowed unless you pay a $500 filing fee. 1040a 2012 tax return See Form 8283-V, Payment Voucher for Filing Fee Under Section 170(f)(13), and its instructions. 1040a 2012 tax return You may be able to deduct the filing fee as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). 1040a 2012 tax return See Deductions Subject to the 2% Limit in Publication 529 for more information. 1040a 2012 tax return More information. 1040a 2012 tax return   For information about determining the fair market value of qualified conservation contributions, see Publication 561. 1040a 2012 tax return For information about the limits that apply to deductions for this type of contribution, see Limits on Deductions , later. 1040a 2012 tax return For more information about qualified conservation contributions, see Regulations section 1. 1040a 2012 tax return 170A-14. 1040a 2012 tax return Future Interest in Tangible Personal Property You cannot deduct the value of a charitable contribution of a future interest in tangible personal property until all intervening interests in and rights to the actual possession or enjoyment of the property have either expired or been turned over to someone other than yourself, a related person, or a related organization. 1040a 2012 tax return But see Fractional Interest in Tangible Personal Property , earlier, and Tangible personal property put to unrelated use , later. 1040a 2012 tax return Related persons include your spouse, children, grandchildren, brothers, sisters, and parents. 1040a 2012 tax return Related organizations may include a partnership or corporation in which you have an interest, or an estate or trust with which you have a connection. 1040a 2012 tax return Tangible personal property. 1040a 2012 tax return   This is any property, other than land or buildings, that can be seen or touched. 1040a 2012 tax return It includes furniture, books, jewelry, paintings, and cars. 1040a 2012 tax return Future interest. 1040a 2012 tax return   This is any interest that is to begin at some future time, regardless of whether it is designated as a future interest under state law. 1040a 2012 tax return Example. 1040a 2012 tax return You own an antique car that you contribute to a museum. 1040a 2012 tax return You give up ownership, but retain the right to keep the car in your garage with your personal collection. 1040a 2012 tax return Because you keep an interest in the property, you cannot deduct the contribution. 1040a 2012 tax return If you turn the car over to the museum in a later year, giving up all rights to its use, possession, and enjoyment, you can take a deduction for the contribution in that later year. 1040a 2012 tax return Inventory If you contribute inventory (property you sell in the course of your business), the amount you can deduct is the smaller of its fair market value on the day you contributed it or its basis. 1040a 2012 tax return The basis of contributed inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. 1040a 2012 tax return You must remove the amount of your charitable contribution deduction from your opening inventory. 1040a 2012 tax return It is not part of the cost of goods sold. 1040a 2012 tax return If the cost of donated inventory is not included in your opening inventory, the inventory's basis is zero and you cannot claim a charitable contribution deduction. 1040a 2012 tax return Treat the inventory's cost as you would ordinarily treat it under your method of accounting. 1040a 2012 tax return For example, include the purchase price of inventory bought and donated in the same year in the cost of goods sold for that year. 1040a 2012 tax return A special rule applies to certain donations of food inventory. 1040a 2012 tax return See Food Inventory, later. 1040a 2012 tax return Patents and Other Intellectual Property If you donate intellectual property to a qualified organization, your deduction is limited to the basis of the property or the fair market value of the property, whichever is smaller. 1040a 2012 tax return Intellectual property means any of the following: Patents. 1040a 2012 tax return Copyrights (other than a copyright described in Internal Revenue Code sections 1221(a)(3) or 1231(b)(1)(C)). 1040a 2012 tax return Trademarks. 1040a 2012 tax return Trade names. 1040a 2012 tax return Trade secrets. 1040a 2012 tax return Know-how. 1040a 2012 tax return Software (other than software described in Internal Revenue Code section 197(e)(3)(A)(i)). 1040a 2012 tax return Other similar property or applications or registrations of such property. 1040a 2012 tax return Additional deduction based on income. 1040a 2012 tax return   You may be able to claim additional charitable contribution deductions in the year of the contribution and years following, based on the income, if any, from the donated property. 1040a 2012 tax return   The following table shows the percentage of income from the property that you can deduct for each of your tax years ending on or after the date of the contribution. 1040a 2012 tax return In the table, “tax year 1,” for example, means your first tax year ending on or after the date of the contribution. 1040a 2012 tax return However, you can take the additional deduction only to the extent the total of the amounts figured using this table is more than the amount of the deduction claimed for the original donation of the property. 1040a 2012 tax return   After the legal life of the intellectual property ends, or after the 10th anniversary of the donation, whichever is earlier, no additional deduction is allowed. 1040a 2012 tax return The additional deductions cannot be taken for intellectual property donated to certain private foundations. 1040a 2012 tax return Tax year Deductible percentage 1 100% 2 100% 3 90% 4 80% 5 70% 6 60% 7 50% 8 40% 9 30% 10 20% 11 10% 12 10% Reporting requirements. 1040a 2012 tax return   You must inform the organization at the time of the donation that you intend to treat the donation as a contribution subject to the provisions just discussed. 1040a 2012 tax return   The organization is required to file an information return showing the income from the property, with a copy to you. 1040a 2012 tax return This is done on Form 8899, Notice of Income From Donated Intellectual Property. 1040a 2012 tax return Determining Fair Market Value This section discusses general guidelines for determining the fair market value of various types of donated property. 1040a 2012 tax return Publication 561 contains a more complete discussion. 1040a 2012 tax return Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. 1040a 2012 tax return Used clothing. 1040a 2012 tax return   The fair market value of used clothing and other personal items is usually far less than the price you paid for them. 1040a 2012 tax return There are no fixed formulas or methods for finding the value of items of clothing. 1040a 2012 tax return   You should claim as the value the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops. 1040a 2012 tax return      Also see Clothing and Household Items , earlier. 1040a 2012 tax return Example. 1040a 2012 tax return    Kristin donated a coat to a thrift store operated by her church. 1040a 2012 tax return She paid $300 for the coat 3 years ago. 1040a 2012 tax return Similar coats in the thrift store sell for $50. 1040a 2012 tax return The fair market value of the coat is $50. 1040a 2012 tax return Kristin's donation is limited to $50. 1040a 2012 tax return Household items. 1040a 2012 tax return   The fair market value of used household items, such as furniture, appliances, and linens, is usually much lower than the price paid when new. 1040a 2012 tax return These items may have little or no market value because they are in a worn condition, out of style, or no longer useful. 1040a 2012 tax return For these reasons, formulas (such as using a percentage of the cost to buy a new replacement item) are not acceptable in determining value. 1040a 2012 tax return   You should support your valuation with photographs, canceled checks, receipts from your purchase of the items, or other evidence. 1040a 2012 tax return Magazine or newspaper articles and photographs that describe the items and statements by the recipients of the items are also useful. 1040a 2012 tax return Do not include any of this evidence with your tax return. 1040a 2012 tax return   If the property is valuable because it is old or unique, see the discussion under Paintings, Antiques, and Other Objects of Art in Publication 561. 1040a 2012 tax return   Also see Clothing and Household Items , earlier. 1040a 2012 tax return Cars, boats, and airplanes. 1040a 2012 tax return   If you contribute a car, boat, or airplane to a charitable organization, you must determine its fair market value. 1040a 2012 tax return Boats. 1040a 2012 tax return   Except for small, inexpensive boats, the valuation of boats should be based on an appraisal by a marine surveyor or appraiser because the physical condition is critical to the value. 1040a 2012 tax return Cars. 1040a 2012 tax return   Certain commercial firms and trade organizations publish used car pricing guides, commonly called “blue books,” containing complete dealer sale prices or dealer average prices for recent model years. 1040a 2012 tax return The guides may be published monthly or seasonally, and for different regions of the country. 1040a 2012 tax return These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. 1040a 2012 tax return The prices are not “official” and these publications are not considered an appraisal of any specific donated property. 1040a 2012 tax return But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. 1040a 2012 tax return   These publications are sometimes available from public libraries, or from the loan officer at a bank, credit union, or finance company. 1040a 2012 tax return You can also find used car pricing information on the Internet. 1040a 2012 tax return   To find the fair market value of a donated car, use the price listed in a used car guide for a private party sale, not the dealer retail value. 1040a 2012 tax return However, the fair market value may be less if the car has engine trouble, body damage, high mileage, or any type of excessive wear. 1040a 2012 tax return The fair market value of a donated car is the same as the price listed in a used car guide for a private party sale only if the guide lists a sales price for a car that is the same make, model, and year, sold in the same area, in the same condition, with the same or similar options or accessories, and with the same or similar warranties as the donated car. 1040a 2012 tax return Example. 1040a 2012 tax return You donate a used car in poor condition to a local high school for use by students studying car repair. 1040a 2012 tax return A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. 1040a 2012 tax return However, the guide shows the price for a private party sale of the car is only $750. 1040a 2012 tax return The fair market value of the car is considered to be $750. 1040a 2012 tax return Large quantities. 1040a 2012 tax return   If you contribute a large number of the same item, fair market value is the price at which comparable numbers of the item are being sold. 1040a 2012 tax return Example. 1040a 2012 tax return You purchase 500 bibles for $1,000. 1040a 2012 tax return The person who sells them to you says the retail value of these bibles is $3,000. 1040a 2012 tax return If you contribute the bibles to a qualified organization, you can claim a deduction only for the price at which similar numbers of the same bible are currently being sold. 1040a 2012 tax return Your charitable contribution is $1,000, unless you can show that similar numbers of that bible wer
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IRS Non-Retaliation Policy

Section 1203 of the IRS Restructuring and Reform Act of 1998 (RRA ’98), created a statutory provision requiring termination of IRS employment for misconduct.  Section 1203(a) provides that the Commissioner of the Internal Revenue shall terminate the employment of any employee of the Internal Revenue Service if there is a final administrative or judicial determination that such employee committed any act or omission described under subsection (b) in the performance of the employee’s official duties. One of the acts described in subsection (b) is retaliation.

Section 1203 (b)(6) provides that:

Violations of the Internal Revenue Code of 1986, Department of Treasury regulations, or policies of the Internal Revenue Service (including the Internal Revenue Manual) for the purpose of retaliating against, or harassing, a taxpayer, taxpayer representative, or other employee of the Internal Revenue Service.

is an act or omission requiring termination.

IRM Section 6.751.1.1 addresses administrative disciplinary matters.  Exhibit 6.751.1-1 is the Internal Revenue Service Guide for Penalty Determinations. Violations of RRA ’98, Section 1203 (b)(6) is included  in the Guide for Penalty Determinations.  This Exhibit shows that the penalty for a First Offense for an RRA ‘98 1203 (b)(6) offense is removal.

Page Last Reviewed or Updated: 05-Nov-2013

The 1040a 2012 Tax Return

1040a 2012 tax return 25. 1040a 2012 tax return   Nonbusiness Casualty and Theft Losses Table of Contents What's New Introduction Useful Items - You may want to see: CasualtyFamily pet. 1040a 2012 tax return Progressive deterioration. 1040a 2012 tax return Damage from corrosive drywall. 1040a 2012 tax return Theft Loss on Deposits Proof of Loss Figuring a LossDecrease in Fair Market Value Adjusted Basis Insurance and Other Reimbursements Single Casualty on Multiple Properties Deduction Limits$100 Rule 10% Rule When To Report Gains and LossesDisaster Area Loss How To Report Gains and Losses What's New New Section C of Form 4684 for Ponzi-type investment schemes. 1040a 2012 tax return  Section C of Form 4684 is new for 2013. 1040a 2012 tax return You must complete Section C if you are claiming a theft loss deduction due to a Ponzi-type investment scheme and are using Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58. 1040a 2012 tax return Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. 1040a 2012 tax return You do not need to complete Appendix A. 1040a 2012 tax return For details, see Losses from Ponzi-type investment schemes , in this chapter. 1040a 2012 tax return Introduction This chapter explains the tax treatment of personal (not business or investment related) casualty losses, theft losses, and losses on deposits. 1040a 2012 tax return The chapter also explains the following  topics. 1040a 2012 tax return How to figure the amount of your loss. 1040a 2012 tax return How to treat insurance and other reimbursements you receive. 1040a 2012 tax return The deduction limits. 1040a 2012 tax return When and how to report a casualty or theft. 1040a 2012 tax return Forms to file. 1040a 2012 tax return    When you have a casualty or theft, you have to file Form 4684. 1040a 2012 tax return You will also have to file one or more of the following forms. 1040a 2012 tax return Schedule A (Form 1040), Itemized Deductions Schedule D (Form 1040), Capital Gains and Losses Condemnations. 1040a 2012 tax return   For information on condemnations of property, see Involuntary Conversions in chapter 1 of Publication 544, Sales and Other Disposition of Assets. 1040a 2012 tax return Workbook for casualties and thefts. 1040a 2012 tax return    Publication 584 is available to help you make a list of your stolen or damaged personal-use property and figure your loss. 1040a 2012 tax return It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. 1040a 2012 tax return Business or investment-related losses. 1040a 2012 tax return   For information on a casualty or theft loss of business or income-producing property, see Publication 547, Casualties, Disasters, and Thefts. 1040a 2012 tax return 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 4684 Casualties and Thefts Casualty A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. 1040a 2012 tax return A sudden event is one that is swift, not gradual or progressive. 1040a 2012 tax return An unexpected event is one that is ordinarily unanticipated and unintended. 1040a 2012 tax return 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. 1040a 2012 tax return Deductible losses. 1040a 2012 tax return   Deductible casualty losses can result from a number of different causes, including the following. 1040a 2012 tax return Car accidents (but see Nondeductible losses , next, for exceptions). 1040a 2012 tax return Earthquakes. 1040a 2012 tax return Fires (but see Nondeductible losses , next, for exceptions). 1040a 2012 tax return Floods. 1040a 2012 tax return Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster as discussed under Disaster Area Losses in Publication 547. 1040a 2012 tax return Mine cave-ins. 1040a 2012 tax return Shipwrecks. 1040a 2012 tax return Sonic booms. 1040a 2012 tax return Storms, including hurricanes and tornadoes. 1040a 2012 tax return Terrorist attacks. 1040a 2012 tax return Vandalism. 1040a 2012 tax return Volcanic eruptions. 1040a 2012 tax return Nondeductible losses. 1040a 2012 tax return   A casualty loss is not deductible if the damage or destruction is caused by the following. 1040a 2012 tax return Accidentally breaking articles such as glassware or china under normal conditions. 1040a 2012 tax return A family pet (explained below). 1040a 2012 tax return A fire if you willfully set it or pay someone else to set it. 1040a 2012 tax return A car accident if your willful negligence or willful act caused it. 1040a 2012 tax return The same is true if the willful act or willful negligence of someone acting for you caused the accident. 1040a 2012 tax return Progressive deterioration (explained later). 1040a 2012 tax return Family pet. 1040a 2012 tax return   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. 1040a 2012 tax return Example. 1040a 2012 tax return Your antique oriental rug was damaged by your new puppy before it was housebroken. 1040a 2012 tax return Because the damage was not unexpected and unusual, the loss is not deductible as a casualty loss. 1040a 2012 tax return Progressive deterioration. 1040a 2012 tax return    Loss of property due to progressive deterioration is not deductible as a casualty loss. 1040a 2012 tax return This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. 1040a 2012 tax return The following are examples of damage due to progressive deterioration. 1040a 2012 tax return The steady weakening of a building due to normal wind and weather conditions. 1040a 2012 tax return The deterioration and damage to a water heater that bursts. 1040a 2012 tax return However, the rust and water damage to rugs and drapes caused by the bursting of a water heater does qualify as a casualty. 1040a 2012 tax return Most losses of property caused by droughts. 1040a 2012 tax return To be deductible, a drought-related loss generally must be incurred in a trade or business or in a transaction entered into for profit. 1040a 2012 tax return Termite or moth damage. 1040a 2012 tax return The damage or destruction of trees, shrubs, or other plants by a fungus, disease, insects, worms, or similar pests. 1040a 2012 tax return However, a sudden destruction due to an unexpected or unusual infestation of beetles or other insects may result in a casualty loss. 1040a 2012 tax return Damage from corrosive drywall. 1040a 2012 tax return   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. 1040a 2012 tax return For details, see Publication 547. 1040a 2012 tax return Theft A theft is the taking and removing of money or property with the intent to deprive the owner of it. 1040a 2012 tax return The taking of property must be illegal under the laws of the state where it occurred and it must have been done with criminal intent. 1040a 2012 tax return You do not need to show a conviction for theft. 1040a 2012 tax return Theft includes the taking of money or property by the following means. 1040a 2012 tax return Blackmail. 1040a 2012 tax return Burglary. 1040a 2012 tax return Embezzlement. 1040a 2012 tax return Extortion. 1040a 2012 tax return Kidnapping for ransom. 1040a 2012 tax return Larceny. 1040a 2012 tax return Robbery. 1040a 2012 tax return The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. 1040a 2012 tax return Decline in market value of stock. 1040a 2012 tax return   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. 1040a 2012 tax return 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. 1040a 2012 tax return You report a capital loss on Schedule D (Form 1040). 1040a 2012 tax return For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. 1040a 2012 tax return Mislaid or lost property. 1040a 2012 tax return   The simple disappearance of money or property is not a theft. 1040a 2012 tax return 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. 1040a 2012 tax return Sudden, unexpected, and unusual events are defined earlier. 1040a 2012 tax return Example. 1040a 2012 tax return A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. 1040a 2012 tax return The diamond falls from the ring and is never found. 1040a 2012 tax return The loss of the diamond is a casualty. 1040a 2012 tax return Losses from Ponzi-type investment schemes. 1040a 2012 tax return   If you had a loss from a Ponzi-type investment scheme, see: Revenue Ruling 2009-9, 2009-14 I. 1040a 2012 tax return R. 1040a 2012 tax return B. 1040a 2012 tax return 735 (available at www. 1040a 2012 tax return irs. 1040a 2012 tax return gov/irb/2009-14_IRB/ar07. 1040a 2012 tax return html). 1040a 2012 tax return Revenue Procedure 2009-20, 2009-14 I. 1040a 2012 tax return R. 1040a 2012 tax return B. 1040a 2012 tax return 749 (available at www. 1040a 2012 tax return irs. 1040a 2012 tax return gov/irb/2009-14_IRB/ar11. 1040a 2012 tax return html). 1040a 2012 tax return Revenue Procedure 2011-58, 2011-50 I. 1040a 2012 tax return R. 1040a 2012 tax return B. 1040a 2012 tax return 849 (available at www. 1040a 2012 tax return irs. 1040a 2012 tax return gov/irb/2011-50_IRB/ar11. 1040a 2012 tax return html). 1040a 2012 tax return 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. 1040a 2012 tax return Skip lines 19 to 27. 1040a 2012 tax return Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. 1040a 2012 tax return You do not need to complete Appendix A. 1040a 2012 tax return For more information, see the above revenue ruling and revenue procedures, and the Instructions for Form 4684. 1040a 2012 tax return   If you choose not to use the procedures in Revenue Procedure 2009-20, you may claim your theft loss by filling out Section B, lines 19 to 39, as appropriate. 1040a 2012 tax return Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. 1040a 2012 tax return If you incurred this type of loss, you can choose one of the following ways to deduct the loss. 1040a 2012 tax return As a casualty loss. 1040a 2012 tax return As an ordinary loss. 1040a 2012 tax return As a nonbusiness bad debt. 1040a 2012 tax return Casualty loss or ordinary loss. 1040a 2012 tax return   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. 1040a 2012 tax return The choice is generally 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. 1040a 2012 tax return 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. 1040a 2012 tax return 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. 1040a 2012 tax return Once you make this choice, you cannot change it without permission from the Internal Revenue Service. 1040a 2012 tax return   If you claim an ordinary loss, report it as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. 1040a 2012 tax return The maximum amount you can claim is $20,000 ($10,000 if you are married filing separately) reduced by any expected state insurance proceeds. 1040a 2012 tax return Your loss is subject to the 2%-of-adjusted-gross-income limit. 1040a 2012 tax return You cannot choose to claim an ordinary loss if any part of the deposit is federally insured. 1040a 2012 tax return Nonbusiness bad debt. 1040a 2012 tax return   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. 1040a 2012 tax return How to report. 1040a 2012 tax return   The kind of deduction you choose for your loss on deposits determines how you report your loss. 1040a 2012 tax return If you choose: Casualty loss — report it on Form 4684 first and then on Schedule A (Form 1040). 1040a 2012 tax return Ordinary loss — report it on Schedule A (Form 1040) as a miscellaneous itemized deduction. 1040a 2012 tax return Nonbusiness bad debt — report it on Form 8949 first and then on Schedule D (Form 1040). 1040a 2012 tax return More information. 1040a 2012 tax return   For more information, see Special Treatment for Losses on Deposits in Insolvent or Bankrupt Financial Institutions in the Instructions for Form 4684 or Deposit in Insolvent or Bankrupt Financial Institution in Publication 550. 1040a 2012 tax return Proof of Loss To deduct a casualty or theft loss, you must be able to prove that you had a casualty or theft. 1040a 2012 tax return You also must be able to support the amount you take as a deduction. 1040a 2012 tax return Casualty loss proof. 1040a 2012 tax return   For a casualty loss, your records should show all the following. 1040a 2012 tax return The type of casualty (car accident, fire, storm, etc. 1040a 2012 tax return ) and when it occurred. 1040a 2012 tax return That the loss was a direct result of the casualty. 1040a 2012 tax return 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. 1040a 2012 tax return Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. 1040a 2012 tax return Theft loss proof. 1040a 2012 tax return   For a theft loss, your records should show all the following. 1040a 2012 tax return When you discovered that your property was missing. 1040a 2012 tax return That your property was stolen. 1040a 2012 tax return That you were the owner of the property. 1040a 2012 tax return Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. 1040a 2012 tax return It is important that you have records that will prove your deduction. 1040a 2012 tax return If you do not have the actual records to support your deduction, you can use other satisfactory evidence to support it. 1040a 2012 tax return Figuring a Loss Figure the amount of your loss using the following steps. 1040a 2012 tax return Determine your adjusted basis in the property before the casualty or theft. 1040a 2012 tax return Determine the decrease in fair market value of the property as a result of the casualty or theft. 1040a 2012 tax return From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you received or expect to receive. 1040a 2012 tax return 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. 1040a 2012 tax return Gain from reimbursement. 1040a 2012 tax return   If your reimbursement is more than your adjusted basis in the property, you have a gain. 1040a 2012 tax return This is true even if the decrease in the FMV of the property is smaller than your adjusted basis. 1040a 2012 tax return If you have a gain, you may have to pay tax on it, or you may be able to postpone reporting the gain. 1040a 2012 tax return See Publication 547 for more information on how to treat a gain from a reimbursement for a casualty or theft. 1040a 2012 tax return Leased property. 1040a 2012 tax return   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. 1040a 2012 tax return 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. 1040a 2012 tax return 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. 1040a 2012 tax return FMV of stolen property. 1040a 2012 tax return   The FMV of property immediately after a theft is considered to be zero, since you no longer have the property. 1040a 2012 tax return Example. 1040a 2012 tax return Several years ago, you purchased silver dollars at face value for $150. 1040a 2012 tax return This is your adjusted basis in the property. 1040a 2012 tax return Your silver dollars were stolen this year. 1040a 2012 tax return The FMV of the coins was $1,000 just before they were stolen, and insurance did not cover them. 1040a 2012 tax return Your theft loss is $150. 1040a 2012 tax return Recovered stolen property. 1040a 2012 tax return   Recovered stolen property is your property that was stolen and later returned to you. 1040a 2012 tax return 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. 1040a 2012 tax return Use this amount to refigure your total loss for the year in which the loss was deducted. 1040a 2012 tax return   If your refigured loss is less than the loss you deducted, you generally have to report the difference as income in the recovery year. 1040a 2012 tax return But report the difference only up to the amount of the loss that reduced your tax. 1040a 2012 tax return For more information on the amount to report, see Recoveries in chapter 12. 1040a 2012 tax return 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. 1040a 2012 tax return However, other measures can also be used to establish certain decreases. 1040a 2012 tax return Appraisal. 1040a 2012 tax return   An appraisal to determine the difference between the FMV of the property immediately before a casualty or theft and immediately afterward should be made by a competent appraiser. 1040a 2012 tax return The appraiser must recognize the effects of any general market decline that may occur along with the casualty. 1040a 2012 tax return This information is needed to limit any deduction to the actual loss resulting from damage to the property. 1040a 2012 tax return   Several factors are important in evaluating the accuracy of an appraisal, including the following. 1040a 2012 tax return The appraiser's familiarity with your property before and after the casualty or theft. 1040a 2012 tax return The appraiser's knowledge of sales of comparable property in the area. 1040a 2012 tax return The appraiser's knowledge of conditions in the area of the casualty. 1040a 2012 tax return The appraiser's method of appraisal. 1040a 2012 tax return    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. 1040a 2012 tax return For more information on disasters, see Disaster Area Losses, in Pub. 1040a 2012 tax return 547. 1040a 2012 tax return Cost of cleaning up or making repairs. 1040a 2012 tax return   The cost of repairing damaged property is not part of a casualty loss. 1040a 2012 tax return Neither is the cost of cleaning up after a casualty. 1040a 2012 tax return But you can use the cost of cleaning up or making repairs after a casualty as a measure of the decrease in FMV if you meet all the following conditions. 1040a 2012 tax return The repairs are actually made. 1040a 2012 tax return The repairs are necessary to bring the property back to its condition before the casualty. 1040a 2012 tax return The amount spent for repairs is not excessive. 1040a 2012 tax return The repairs take care of the damage only. 1040a 2012 tax return The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. 1040a 2012 tax return Landscaping. 1040a 2012 tax return   The cost of restoring landscaping to its original condition after a casualty may indicate the decrease in FMV. 1040a 2012 tax return You may be able to measure your loss by what you spend on the following. 1040a 2012 tax return Removing destroyed or damaged trees and shrubs minus any salvage you receive. 1040a 2012 tax return Pruning and other measures taken to preserve damaged trees and shrubs. 1040a 2012 tax return Replanting necessary to restore the property to its approximate value before the casualty. 1040a 2012 tax return Car value. 1040a 2012 tax return    Books issued by various automobile organizations that list your car may be useful in figuring the value of your car. 1040a 2012 tax return You can use the book's retail values and modify them by such factors as mileage and the condition of your car to figure its value. 1040a 2012 tax return 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. 1040a 2012 tax return If your car is not listed in the books, determine its value from other sources. 1040a 2012 tax return A dealer's offer for your car as a trade-in on a new car is not usually a measure of its true value. 1040a 2012 tax return 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. 1040a 2012 tax return Cost of protection. 1040a 2012 tax return   The cost of protecting your property against a casualty or theft is not part of a casualty or theft loss. 1040a 2012 tax return The amount you spend on insurance or to board up your house against a storm is not part of your loss. 1040a 2012 tax return   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. 1040a 2012 tax return An example would be the cost of a dike to prevent flooding. 1040a 2012 tax return Exception. 1040a 2012 tax return   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. 1040a 2012 tax return See Disaster Area Losses in Publication 547. 1040a 2012 tax return Incidental expenses. 1040a 2012 tax return   Any incidental expenses you have 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. 1040a 2012 tax return Replacement cost. 1040a 2012 tax return   The cost of replacing stolen or destroyed property is not part of a casualty or theft loss. 1040a 2012 tax return Sentimental value. 1040a 2012 tax return   Do not consider sentimental value when determining your loss. 1040a 2012 tax return 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. 1040a 2012 tax return Decline in market value of property in or near casualty area. 1040a 2012 tax return   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. 1040a 2012 tax return You have a loss only for actual casualty damage to your property. 1040a 2012 tax return However, if your home is in a federally declared disaster area, see Disaster Area Losses in Publication 547. 1040a 2012 tax return Costs of photographs and appraisals. 1040a 2012 tax return    Photographs taken after a casualty will be helpful in establishing the condition and value of the property after it was damaged. 1040a 2012 tax return Photographs showing the condition of the property after it was repaired, restored, or replaced may also be helpful. 1040a 2012 tax return    Appraisals are used to figure the decrease in FMV because of a casualty or theft. 1040a 2012 tax return See Appraisal , earlier, under Figuring Decrease in FMV — Items To Consider, for information about appraisals. 1040a 2012 tax return   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. 1040a 2012 tax return You can claim these costs as a miscellaneous itemized deduction subject to the 2%-of-adjusted-gross-income limit on Schedule A (Form 1040). 1040a 2012 tax return For information about miscellaneous deductions, see chapter 28. 1040a 2012 tax return Adjusted Basis Adjusted basis is your basis in the property (usually cost) increased or decreased by various events, such as improvements and casualty losses. 1040a 2012 tax return For more information, see chapter 13. 1040a 2012 tax return Insurance and Other Reimbursements If you receive an insurance payment or other type of reimbursement, you must subtract the reimbursement when you figure your loss. 1040a 2012 tax return You do not have a casualty or theft loss to the extent you are reimbursed. 1040a 2012 tax return If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. 1040a 2012 tax return You must reduce your loss even if you do not receive payment until a later tax year. 1040a 2012 tax return See Reimbursement Received After Deducting Loss , later. 1040a 2012 tax return Failure to file a claim for reimbursement. 1040a 2012 tax return   If your property is covered by insurance, you must file a timely insurance claim for reimbursement of your loss. 1040a 2012 tax return Otherwise, you cannot deduct this loss as a casualty or theft loss. 1040a 2012 tax return However, this rule does not apply to the portion of the loss not covered by insurance (for example, a deductible). 1040a 2012 tax return Example. 1040a 2012 tax return You have a car insurance policy with a $1,000 deductible. 1040a 2012 tax return Because your insurance did not cover the first $1,000 of an auto collision, the $1,000 would be deductible (subject to the deduction limits discussed later). 1040a 2012 tax return This is true even if you do not file an insurance claim, because your insurance policy would never have reimbursed you for the deductible. 1040a 2012 tax return Types of Reimbursements The most common type of reimbursement is an insurance payment for your stolen or damaged property. 1040a 2012 tax return Other types of reimbursements are discussed next. 1040a 2012 tax return Also see the Instructions for Form 4684. 1040a 2012 tax return Employer's emergency disaster fund. 1040a 2012 tax return   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. 1040a 2012 tax return Take into consideration only the amount you used to replace your destroyed or damaged property. 1040a 2012 tax return Example. 1040a 2012 tax return Your home was extensively damaged by a tornado. 1040a 2012 tax return Your loss after reimbursement from your insurance company was $10,000. 1040a 2012 tax return Your employer set up a disaster relief fund for its employees. 1040a 2012 tax return Employees receiving money from the fund had to use it to rehabilitate or replace their damaged or destroyed property. 1040a 2012 tax return You received $4,000 from the fund and spent the entire amount on repairs to your home. 1040a 2012 tax return In figuring your casualty loss, you must reduce your unreimbursed loss ($10,000) by the $4,000 you received from your employer's fund. 1040a 2012 tax return Your casualty loss before applying the deduction limits discussed later is $6,000. 1040a 2012 tax return Cash gifts. 1040a 2012 tax return   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. 1040a 2012 tax return This applies even if you use the money to pay for repairs to property damaged in the disaster. 1040a 2012 tax return Example. 1040a 2012 tax return Your home was damaged by a hurricane. 1040a 2012 tax return Relatives and neighbors made cash gifts to you that were excludable from your income. 1040a 2012 tax return You used part of the cash gifts to pay for repairs to your home. 1040a 2012 tax return There were no limits or restrictions on how you could use the cash gifts. 1040a 2012 tax return Because it was an excludable gift, the money you received and used to pay for repairs to your home does not reduce your casualty loss on the damaged home. 1040a 2012 tax return Insurance payments for living expenses. 1040a 2012 tax return   You do not reduce your casualty loss by insurance payments you receive to cover living expenses in either of the following situations. 1040a 2012 tax return You lose the use of your main home because of a casualty. 1040a 2012 tax return Government authorities do not allow you access to your main home because of a casualty or threat of one. 1040a 2012 tax return Inclusion in income. 1040a 2012 tax return   If these insurance payments are more than the temporary increase in your living expenses, you must include the excess in your income. 1040a 2012 tax return Report this amount on Form 1040, line 21. 1040a 2012 tax return However, if the casualty occurs in a federally declared disaster area, none of the insurance payments are taxable. 1040a 2012 tax return See Qualified disaster relief payments, under Disaster Area Losses in Publication 547. 1040a 2012 tax return   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. 1040a 2012 tax return Actual living expenses are the reasonable and necessary expenses incurred because of the loss of your main home. 1040a 2012 tax return Generally, these expenses include the amounts you pay for the following. 1040a 2012 tax return Rent for suitable housing. 1040a 2012 tax return Transportation. 1040a 2012 tax return Food. 1040a 2012 tax return Utilities. 1040a 2012 tax return Miscellaneous services. 1040a 2012 tax return 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. 1040a 2012 tax return Example. 1040a 2012 tax return As a result of a fire, you vacated your apartment for a month and moved to a motel. 1040a 2012 tax return You normally pay $525 a month for rent. 1040a 2012 tax return None was charged for the month the apartment was vacated. 1040a 2012 tax return Your motel rent for this month was $1,200. 1040a 2012 tax return You normally pay $200 a month for food. 1040a 2012 tax return Your food expenses for the month you lived in the motel were $400. 1040a 2012 tax return You received $1,100 from your insurance company to cover your living expenses. 1040a 2012 tax return You determine the payment you must include in income as follows. 1040a 2012 tax return 1) Insurance payment for living expenses $1,100 2) Actual expenses during the month you are unable to use your home because of fire 1,600   3) Normal living expenses 725   4) Temporary increase in living  expenses: Subtract line 3 from line 2 875 5) Amount of payment includible  in income: Subtract line 4  from line 1 $ 225 Tax year of inclusion. 1040a 2012 tax return   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. 1040a 2012 tax return Example. 1040a 2012 tax return Your main home was destroyed by a tornado in August 2011. 1040a 2012 tax return You regained use of your home in November 2012. 1040a 2012 tax return The insurance payments you received in 2011 and 2012 were $1,500 more than the temporary increase in your living expenses during those years. 1040a 2012 tax return You include this amount in income on your 2012 Form 1040. 1040a 2012 tax return 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. 1040a 2012 tax return Disaster relief. 1040a 2012 tax return   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. 1040a 2012 tax return Qualified disaster relief payments you receive for expenses you incurred as a result of a federally declared disaster are not taxable income to you. 1040a 2012 tax return For more information, see Disaster Area Losses in Publication 547. 1040a 2012 tax return Disaster unemployment assistance payments are unemployment benefits that are taxable. 1040a 2012 tax return Generally, disaster relief grants and qualified disaster mitigation payments made under the Robert T. 1040a 2012 tax return Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) are not includible in your income. 1040a 2012 tax return See Disaster Area Losses in Publication 547. 1040a 2012 tax return Reimbursement Received After Deducting Loss If you figured your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you receive your actual reimbursement. 1040a 2012 tax return This section explains the adjustment you may have to make. 1040a 2012 tax return Actual reimbursement less than expected. 1040a 2012 tax return   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. 1040a 2012 tax return Example. 1040a 2012 tax return Your personal car had an FMV of $2,000 when it was destroyed in a collision with another car in 2012. 1040a 2012 tax return The accident was due to the negligence of the other driver. 1040a 2012 tax return At the end of 2012, there was a reasonable prospect that the owner of the other car would reimburse you in full. 1040a 2012 tax return You did not have a deductible loss in 2012. 1040a 2012 tax return In January 2013, the court awarded you a judgment of $2,000. 1040a 2012 tax return However, in July it became apparent that you will be unable to collect any amount from the other driver. 1040a 2012 tax return You can deduct the loss in 2013 subject to the limits discussed later. 1040a 2012 tax return Actual reimbursement more than expected. 1040a 2012 tax return   If you later receive more reimbursement than you expected after you claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. 1040a 2012 tax return 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. 1040a 2012 tax return You do not refigure your tax for the year you claimed the deduction. 1040a 2012 tax return For more information, see Recoveries in chapter 12. 1040a 2012 tax return 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. 1040a 2012 tax return 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. 1040a 2012 tax return Include the gain as ordinary income up to the amount of your deduction that reduced your tax for the earlier year. 1040a 2012 tax return See Figuring a Gain in Publication 547 for more information on how to treat a gain from the reimbursement of a casualty or theft. 1040a 2012 tax return Actual reimbursement same as expected. 1040a 2012 tax return   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. 1040a 2012 tax return Example. 1040a 2012 tax return In December 2013, you had a collision while driving your personal car. 1040a 2012 tax return Repairs to the car cost $950. 1040a 2012 tax return You had $100 deductible collision insurance. 1040a 2012 tax return Your insurance company agreed to reimburse you for the rest of the damage. 1040a 2012 tax return Because you expected a reimbursement from the insurance company, you did not have a casualty loss deduction in 2013. 1040a 2012 tax return Due to the $100 rule (discussed later under Deduction Limits ), you cannot deduct the $100 you paid as the deductible. 1040a 2012 tax return When you receive the $850 from the insurance company in 2014, do not report it as income. 1040a 2012 tax return Single Casualty on Multiple Properties Personal property. 1040a 2012 tax return   Personal property is any property that is not real property. 1040a 2012 tax return 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. 1040a 2012 tax return Then combine these separate losses to figure the total loss from that casualty or theft. 1040a 2012 tax return Example. 1040a 2012 tax return A fire in your home destroyed an upholstered chair, an oriental rug, and an antique table. 1040a 2012 tax return You did not have fire insurance to cover your loss. 1040a 2012 tax return (This was the only casualty or theft you had during the year. 1040a 2012 tax return ) You paid $750 for the chair and you established that it had an FMV of $500 just before the fire. 1040a 2012 tax return The rug cost $3,000 and had an FMV of $2,500 just before the fire. 1040a 2012 tax return You bought the table at an auction for $100 before discovering it was an antique. 1040a 2012 tax return It had been appraised at $900 before the fire. 1040a 2012 tax return You figure your loss on each of these items as follows:     Chair Rug Table 1) Basis (cost) $750 $3,000 $100 2) FMV before fire $500 $2,500 $900 3) FMV after fire –0– –0– –0– 4) Decrease in FMV $500 $2,500 $900 5) Loss (smaller of (1) or  (4)) $500 $2,500 $100           6) Total loss     $3,100 Real property. 1040a 2012 tax return   In figuring a casualty loss on personal-use real property, treat the entire property (including any improvements, such as buildings, trees, and shrubs) as one item. 1040a 2012 tax return Figure the loss using the smaller of the adjusted basis or the decrease in FMV of the entire property. 1040a 2012 tax return Example. 1040a 2012 tax return You bought your home a few years ago. 1040a 2012 tax return You paid $160,000 ($20,000 for the land and $140,000 for the house). 1040a 2012 tax return You also spent $2,000 for landscaping. 1040a 2012 tax return This year a fire destroyed your home. 1040a 2012 tax return The fire also damaged the shrubbery and trees in your yard. 1040a 2012 tax return The fire was your only casualty or theft loss this year. 1040a 2012 tax return Competent appraisers valued the property as a whole at $200,000 before the fire, but only $30,000 after the fire. 1040a 2012 tax return (The loss to your household furnishings is not shown in this example. 1040a 2012 tax return It would be figured separately on each item, as explained earlier under Personal property . 1040a 2012 tax return ) Shortly after the fire, the insurance company paid you $155,000 for the loss. 1040a 2012 tax return You figure your casualty loss as follows: 1) Adjusted basis of the entire property (land, building, and landscaping) $162,000 2) FMV of entire property before fire $200,000 3) FMV of entire property after fire 30,000 4) Decrease in FMV of entire  property $170,000 5) Loss (smaller of (1) or (4)) $162,000 6) Subtract insurance 155,000 7) Amount of loss after reimbursement $7,000 Deduction Limits After you have figured your casualty or theft loss, you must figure how much of the loss you can deduct. 1040a 2012 tax return If the loss was to property for your personal use or your family's use, there are two limits on the amount you can deduct for your casualty or theft loss. 1040a 2012 tax return You must reduce each casualty or theft loss by $100 ($100 rule). 1040a 2012 tax return You must further reduce the total of all your casualty or theft losses by 10% of your adjusted gross income (10% rule). 1040a 2012 tax return You make these reductions on Form 4684. 1040a 2012 tax return These rules are explained next and Table 25-1 summarizes how to apply the $100 rule and the 10% rule in various situations. 1040a 2012 tax return For more detailed explanations and examples, see Publication 547. 1040a 2012 tax return Table 25-1. 1040a 2012 tax return How To Apply the Deduction Limits for Personal-Use Property   $100 Rule 10% Rule General Application You must reduce each casualty or theft loss by $100 when figuring your deduction. 1040a 2012 tax return Apply this rule after you have figured the amount of your loss. 1040a 2012 tax return You must reduce your total casualty or theft loss by 10% of your adjusted gross income. 1040a 2012 tax return Apply this rule after you reduce each loss by $100 (the $100 rule). 1040a 2012 tax return Single Event Apply this rule only once, even if many pieces of property are affected. 1040a 2012 tax return Apply this rule only once, even if many pieces of property are affected. 1040a 2012 tax return More Than One Event Apply to the loss from each event. 1040a 2012 tax return Apply to the total of all your losses from all events. 1040a 2012 tax return More Than One Person— With Loss From the Same Event (other than a married couple filing jointly) Apply separately to each person. 1040a 2012 tax return Apply separately to each person. 1040a 2012 tax return Married Couple—With Loss From the Same Event Filing Jointly Apply as if you were one person. 1040a 2012 tax return Apply as if you were one person. 1040a 2012 tax return Filing Separately Apply separately to each spouse. 1040a 2012 tax return Apply separately to each spouse. 1040a 2012 tax return More Than One Owner (other than a married couple filing jointly) Apply separately to each owner of jointly owned property. 1040a 2012 tax return Apply separately to each owner of jointly owned property. 1040a 2012 tax return Property used partly for business and partly for personal purposes. 1040a 2012 tax return   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 part and for the business or income-producing part. 1040a 2012 tax return You must figure each loss separately because the $100 rule and the 10% rule apply only to the loss on the personal-use part of the property. 1040a 2012 tax return $100 Rule After you have figured your casualty or theft loss on personal-use property, you must reduce that loss by $100. 1040a 2012 tax return This reduction applies to each total casualty or theft loss. 1040a 2012 tax return It does not matter how many pieces of property are involved in an event. 1040a 2012 tax return Only a single $100 reduction applies. 1040a 2012 tax return Example. 1040a 2012 tax return A hailstorm damages your home and your car. 1040a 2012 tax return Determine the amount of loss, as discussed earlier, for each of these items. 1040a 2012 tax return Since the losses are due to a single event, you combine the losses and reduce the combined amount by $100. 1040a 2012 tax return Single event. 1040a 2012 tax return   Generally, events closely related in origin cause a single casualty. 1040a 2012 tax return 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. 1040a 2012 tax return 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. 1040a 2012 tax return Apply this rule after you reduce each loss by $100. 1040a 2012 tax return For more information, see the Form 4684 instructions. 1040a 2012 tax return If you have both gains and losses from casualties or thefts, see Gains and losses , later in this discussion. 1040a 2012 tax return Example 1. 1040a 2012 tax return In June, you discovered that your house had been burglarized. 1040a 2012 tax return Your loss after insurance reimbursement was $2,000. 1040a 2012 tax return Your adjusted gross income for the year you discovered the theft is $29,500. 1040a 2012 tax return You first apply the $100 rule and then the 10% rule. 1040a 2012 tax return Figure your theft loss deduction as follows. 1040a 2012 tax return 1) Loss after insurance $2,000 2) Subtract $100 100 3) Loss after $100 rule $1,900 4) Subtract 10% × $29,500 AGI 2,950 5) Theft loss deduction –0– You do not have a theft loss deduction because your loss after you apply the $100 rule ($1,900) is less than 10% of your adjusted gross income ($2,950). 1040a 2012 tax return Example 2. 1040a 2012 tax return In March, you had a car accident that totally destroyed your car. 1040a 2012 tax return You did not have collision insurance on your car, so you did not receive any insurance reimbursement. 1040a 2012 tax return Your loss on the car was $1,800. 1040a 2012 tax return In November, a fire damaged your basement and totally destroyed the furniture, washer, dryer, and other items stored there. 1040a 2012 tax return Your loss on the basement items after reimbursement was $2,100. 1040a 2012 tax return Your adjusted gross income for the year that the accident and fire occurred is $25,000. 1040a 2012 tax return You figure your casualty loss deduction as follows. 1040a 2012 tax return       Base-     Car ment 1) Loss $1,800 $2,100 2) Subtract $100 per incident 100 100 3) Loss after $100 rule $1,700 $2,000 4) Total loss $3,700 5) Subtract 10% × $25,000 AGI 2,500 6) Casualty loss deduction $1,200 Gains and losses. 1040a 2012 tax return   If you had both gains and losses from casualties or thefts to personal-use property, you must compare your total gains to your total losses. 1040a 2012 tax return 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. 1040a 2012 tax return Casualty or theft gains do not include gains you choose to postpone. 1040a 2012 tax return See Publication 547 for information on the postponement of gain. 1040a 2012 tax return Losses more than gains. 1040a 2012 tax return   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. 1040a 2012 tax return The rest, if any, is your deductible loss from personal-use property. 1040a 2012 tax return Gains more than losses. 1040a 2012 tax return   If your recognized gains are more than your losses, subtract your losses from your gains. 1040a 2012 tax return The difference is treated as capital gain and must be reported on Schedule D (Form 1040). 1040a 2012 tax return The 10% rule does not apply to your gains. 1040a 2012 tax return When To Report Gains and Losses Gains. 1040a 2012 tax return   If you receive an insurance or other reimbursement that is more than your adjusted basis in the destroyed or stolen property, you have a gain from the casualty or theft. 1040a 2012 tax return You must include this gain in your income in the year you receive the reimbursement, unless you choose to postpone reporting the gain as explained in Publication 547. 1040a 2012 tax return If you have a loss, see Table 25-2 . 1040a 2012 tax return Table 25-2. 1040a 2012 tax return When To Deduct a Loss IF you have a loss. 1040a 2012 tax return . 1040a 2012 tax return . 1040a 2012 tax return THEN deduct it in the year. 1040a 2012 tax return . 1040a 2012 tax return . 1040a 2012 tax return from a casualty, the loss occurred. 1040a 2012 tax return in a federally declared disaster area, the disaster occurred or the year immediately before the disaster. 1040a 2012 tax return from a theft, the theft was discovered. 1040a 2012 tax return on a deposit treated as a:   • casualty or any ordinary loss, a reasonable estimate can be made. 1040a 2012 tax return • bad debt, deposits are totally worthless. 1040a 2012 tax return Losses. 1040a 2012 tax return   Generally, you can deduct a casualty loss that is not reimbursable only in the tax year in which the casualty occurred. 1040a 2012 tax return This is true even if you do not repair or replace the damaged property until a later year. 1040a 2012 tax return   You can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. 1040a 2012 tax return   If you are not sure whether part of your casualty or theft loss will be reimbursed, do not deduct that part until the tax year when you become reasonably certain that it will not be reimbursed. 1040a 2012 tax return Loss on deposits. 1040a 2012 tax return   If your loss is a loss on deposits in an insolvent or bankrupt financial institution, see Loss on Deposits , earlier. 1040a 2012 tax return Disaster Area Loss You generally must deduct a casualty loss in the year it occurred. 1040a 2012 tax return However, if you have a casualty loss from a federally declared disaster that occurred in an area warranting public or individual assistance (or both), you can choose to deduct the loss on your tax return or amended return for either of the following years. 1040a 2012 tax return The year the disaster occurred. 1040a 2012 tax return The year immediately preceding the year the disaster occurred. 1040a 2012 tax return Gains. 1040a 2012 tax return    Special rules apply if you choose to postpone reporting gain on property damaged or destroyed in a federally declared disaster area. 1040a 2012 tax return For those special rules, see Publication 547. 1040a 2012 tax return Postponed tax deadlines. 1040a 2012 tax return   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. 1040a 2012 tax return The tax deadlines the IRS may postpone include those for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA. 1040a 2012 tax return   If any tax deadline is postponed, the IRS will publicize the postponement in your area by publishing a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). 1040a 2012 tax return Go to www. 1040a 2012 tax return irs. 1040a 2012 tax return gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. 1040a 2012 tax return Who is eligible. 1040a 2012 tax return   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. 1040a 2012 tax return Any individual whose main home is located in a covered disaster area (defined next). 1040a 2012 tax return Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. 1040a 2012 tax return Any individual who is a relief worker affiliated with a recognized government or philanthropic organization who is assisting in a covered disaster area. 1040a 2012 tax return Any individual, business entity, or sole proprietorship whose records are needed to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. 1040a 2012 tax return The main home or principal place of business does not have to be located in the covered disaster area. 1040a 2012 tax return Any estate or trust that has tax records necessary to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. 1040a 2012 tax return The spouse on a joint return with a taxpayer who is eligible for postponements. 1040a 2012 tax return Any individual, business entity, or sole proprietorship not located in a covered disaster area, but whose records necessary to meet a postponed tax deadline are located in the covered disaster area. 1040a 2012 tax return Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. 1040a 2012 tax return Any other person determined by the IRS to be affected by a federally declared disaster. 1040a 2012 tax return Covered disaster area. 1040a 2012 tax return   This is an area of a federally declared disaster in which the IRS has decided to postpone tax deadlines for up to 1 year. 1040a 2012 tax return Abatement of interest and penalties. 1040a 2012 tax return   The IRS may abate the interest and penalties on underpaid income tax for the length of any postponement of tax deadlines. 1040a 2012 tax return More information. 1040a 2012 tax return   For more information, see Disaster Area Losses in Publication 547. 1040a 2012 tax return How To Report Gains and Losses Use Form 4684 to report a gain or a deductible loss from a casualty or theft. 1040a 2012 tax return If you have more than one casualty or theft, use a separate Form 4684 to determine your gain or loss for each event. 1040a 2012 tax return Combine the gains and losses on one Form 4684. 1040a 2012 tax return Follow the form instructions as to which lines to fill out. 1040a 2012 tax return In addition, you must use the appropriate schedule to report a gain or loss. 1040a 2012 tax return The schedule you use depends on whether you have a gain or loss. 1040a 2012 tax return If you have a: Report it on: Gain Schedule D (Form 1040) Loss Schedule A (Form 1040) Adjustments to basis. 1040a 2012 tax return   If you have a casualty or theft loss, you must decrease your basis in the property by any insurance or other reimbursement you receive, and by any deductible loss. 1040a 2012 tax return Amounts you spend to restore your property after a casualty increase your adjusted basis. 1040a 2012 tax return See Adjusted Basis in chapter 13 for more information. 1040a 2012 tax return Net operating loss (NOL). 1040a 2012 tax return    If your casualty or theft loss deduction causes your deductions for the year to be more than your income for the year, you may have an NOL. 1040a 2012 tax return You can use an NOL to lower your tax in an earlier year, allowing you to get a refund for tax you have already paid. 1040a 2012 tax return Or, you can use it to lower your tax in a later year. 1040a 2012 tax return You do not have to be in business to have an NOL from a casualty or theft loss. 1040a 2012 tax return For more information, see Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. 1040a 2012 tax return Prev  Up  Next   Home   More Online Publications