File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

2011 Tax Act

Irs Tax Form 2012 1040aNj 1040 NrState Tax Filing RequirementsForm 1040 Federal Tax FormTurbo Tax Form 1040xAmending Income Tax Returns For IndividualsWho Can Use 1040ezUnited Way Free Tax PreparationIrs Tax Filing OnlineTaxact 1040nrFile For Extension 2011 Taxes FreeEfile State Income TaxI Need To Amend My 2012 Tax ReturnAmend Tax ReturnFile Taxes Online Free 2012Irs Tax Forms 2010Irs Free FileTaxact 2012 ReturnEz 10401040ez Form 2012Income Tax 1040ez1040 Ez File Online FreeFree State EfileWhere Can I File My State Taxes OnlineCan I Amend My Tax ReturnLate TaxFree Tax Usa 2012Free Tax FilingWww Free State Tax ReturnState Tax Return Free E FileFile State Return OnlyAmmending A Tax ReturnEz Tax FormFiling Taxes For FreeIncome Tax ExtentionAmending Tax ReturnIrs Tax Extension Forms1040nr InstructionsFree Federal And State Tax E FileE File 2012 Taxes

2011 Tax Act

2011 tax act 11. 2011 tax act   Casualties, Thefts, and Condemnations Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Casualties and TheftsDeductible losses. 2011 tax act Nondeductible losses. 2011 tax act Family pet. 2011 tax act Progressive deterioration. 2011 tax act Decline in market value of stock. 2011 tax act Mislaid or lost property. 2011 tax act Farming Losses How To Figure a Loss Deduction Limits on Losses of Personal-Use Property When Loss Is Deductible Proof of Loss Figuring a Gain Other Involuntary ConversionsCondemnation Irrigation Project Livestock Losses Tree Seedlings Postponing GainException. 2011 tax act Related persons. 2011 tax act Replacement Property Replacement Period How To Postpone Gain Disaster Area LossesWho is eligible. 2011 tax act Covered disaster area. 2011 tax act Reporting Gains and Losses Introduction This chapter explains the tax treatment of casualties, thefts, and condemnations. 2011 tax act A casualty occurs when property is damaged, destroyed, or lost due to a sudden, unexpected, or unusual event. 2011 tax act A theft occurs when property is stolen. 2011 tax act A condemnation occurs when private property is legally taken for public use without the owner's consent. 2011 tax act A casualty, theft, or condemnation may result in a deductible loss or taxable gain on your federal income tax return. 2011 tax act You may have a deductible loss or a taxable gain even if only a portion of your property was affected by a casualty, theft, or condemnation. 2011 tax act An involuntary conversion occurs when you receive money or other property as reimbursement for a casualty, theft, condemnation, disposition of property under threat of condemnation, or certain other events discussed in this chapter. 2011 tax act If an involuntary conversion results in a gain and you buy qualified replacement property within the specified replacement period, you can postpone reporting the gain on your income tax return. 2011 tax act For more information, see Postponing Gain , later. 2011 tax act Topics - This chapter discusses: Casualties and thefts How to figure a loss or gain Other involuntary conversions Postponing gain Disaster area losses Reporting gains and losses Drought involving property connected with a trade or business or a transaction entered into for profit Useful Items - You may want to see: Publication 523 Selling Your Home 525 Taxable and Nontaxable Income 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 544 Sales and Other Dispositions of Assets 547 Casualties, Disasters, and Thefts 584 Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property) 584-B Business Casualty, Disaster, and Theft Loss Workbook Form (and Instructions) Sch A (Form 1040) Itemized Deductions Sch D (Form 1040) Capital Gains and Losses Sch F (Form 1040) Profit or Loss From Farming 4684 Casualties and Thefts 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. 2011 tax act Casualties and Thefts If your property is destroyed, damaged, or stolen, you may have a deductible loss. 2011 tax act If the insurance or other reimbursement is more than the adjusted basis of the destroyed, damaged, or stolen property, you may have a taxable gain. 2011 tax act Casualty. 2011 tax act   A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. 2011 tax act A sudden event is one that is swift, not gradual or progressive. 2011 tax act An unexpected event is one that is ordinarily unanticipated and unintended. 2011 tax act 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. 2011 tax act Deductible losses. 2011 tax act   Deductible casualty losses can result from a number of different causes, including the following. 2011 tax act Airplane crashes. 2011 tax act Car, truck, or farm equipment accidents not resulting from your willful act or willful negligence. 2011 tax act Earthquakes. 2011 tax act Fires (but see Nondeductible losses next for exceptions). 2011 tax act Floods. 2011 tax act Freezing. 2011 tax act 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. 2011 tax act Lightning. 2011 tax act Storms, including hurricanes and tornadoes. 2011 tax act Terrorist attacks. 2011 tax act Vandalism. 2011 tax act Volcanic eruptions. 2011 tax act Nondeductible losses. 2011 tax act   A casualty loss is not deductible if the damage or destruction is caused by the following. 2011 tax act Accidentally breaking articles such as glassware or china under normal conditions. 2011 tax act A family pet (explained below). 2011 tax act A fire if you willfully set it, or pay someone else to set it. 2011 tax act A car, truck, or farm equipment accident if your willful negligence or willful act caused it. 2011 tax act The same is true if the willful act or willful negligence of someone acting for you caused the accident. 2011 tax act Progressive deterioration (explained below). 2011 tax act Family pet. 2011 tax act   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed above under Casualty are met. 2011 tax act Example. 2011 tax act You keep your horse in your yard. 2011 tax act The ornamental fruit trees in your yard were damaged when your horse stripped the bark from them. 2011 tax act Some of the trees were completely girdled and died. 2011 tax act Because the damage was not unexpected or unusual, the loss is not deductible. 2011 tax act Progressive deterioration. 2011 tax act   Loss of property due to progressive deterioration is not deductible as a casualty loss. 2011 tax act This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. 2011 tax act Examples of damage due to progressive deterioration include damage from rust, corrosion, or termites. 2011 tax act However, weather-related conditions or disease may cause another type of involuntary conversion. 2011 tax act See Other Involuntary Conversions , later. 2011 tax act Theft. 2011 tax act   A theft is the taking and removing of money or property with the intent to deprive the owner of it. 2011 tax act The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent. 2011 tax act You do not need to show a conviction for theft. 2011 tax act   Theft includes the taking of money or property by the following means: Blackmail, Burglary, Embezzlement, Extortion, Kidnapping for ransom, Larceny, Robbery, or Threats. 2011 tax act The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. 2011 tax act Decline in market value of stock. 2011 tax act   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. 2011 tax act 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. 2011 tax act You report a capital loss on Schedule D (Form 1040). 2011 tax act For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. 2011 tax act Mislaid or lost property. 2011 tax act   The simple disappearance of money or property is not a theft. 2011 tax act 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. 2011 tax act Example. 2011 tax act A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. 2011 tax act The diamond falls from the ring and is never found. 2011 tax act The loss of the diamond is a casualty. 2011 tax act Farming Losses You can deduct certain casualty or theft losses that occur in the business of farming. 2011 tax act The following is a discussion of some losses you can deduct and some you cannot deduct. 2011 tax act Livestock or produce bought for resale. 2011 tax act   Casualty or theft losses of livestock or produce bought for resale are deductible if you report your income on the cash method. 2011 tax act If you report your income on an accrual method, take casualty and theft losses on property bought for resale by omitting the item from the closing inventory for the year of the loss. 2011 tax act You cannot take a separate deduction. 2011 tax act Livestock, plants, produce, and crops raised for sale. 2011 tax act   Losses of livestock, plants, produce, and crops raised for sale are generally not deductible if you report your income on the cash method. 2011 tax act You have already deducted the cost of raising these items as farm expenses, so their basis is equal to zero. 2011 tax act   For plants with a preproductive period of more than 2 years, you may have a deductible loss if you have a tax basis in the plants. 2011 tax act You usually have a tax basis if you capitalized the expenses associated with these plants under the uniform capitalization rules. 2011 tax act The uniform capitalization rules are discussed in chapter 6. 2011 tax act   If you report your income on an accrual method, casualty or theft losses are deductible only if you included the items in your inventory at the beginning of your tax year. 2011 tax act You get the deduction by omitting the item from your inventory at the close of your tax year. 2011 tax act You cannot take a separate casualty or theft deduction. 2011 tax act Income loss. 2011 tax act   A loss of future income is not deductible. 2011 tax act Example. 2011 tax act A severe flood destroyed your crops. 2011 tax act Because you are a cash method taxpayer and already deducted the cost of raising the crops as farm expenses, this loss is not deductible, as explained above under Livestock, plants, produce, and crops raised for sale . 2011 tax act You estimate that the crop loss will reduce your farm income by $25,000. 2011 tax act This loss of future income is also not deductible. 2011 tax act Loss of timber. 2011 tax act   If you sell timber downed as a result of a casualty, treat the proceeds from the sale as a reimbursement. 2011 tax act If you use the proceeds to buy qualified replacement property, you can postpone reporting the gain. 2011 tax act See Postponing Gain , later. 2011 tax act Property used in farming. 2011 tax act   Casualty and theft losses of property used in your farm business usually result in deductible losses. 2011 tax act If a fire or storm destroyed your barn, or you lose by casualty or theft an animal you bought for draft, breeding, dairy, or sport, you may have a deductible loss. 2011 tax act See How To Figure a Loss , later. 2011 tax act Raised draft, breeding, dairy, or sporting animals. 2011 tax act   Generally, losses of raised draft, breeding, dairy, or sporting animals do not result in deductible casualty or theft losses because you have no basis in the animals. 2011 tax act However, you may have a basis in the animal and therefore may be able to claim a deduction if either of the following situations applies to you. 2011 tax act You use inventories to determine your income and you included the animals in your inventory. 2011 tax act You capitalized the expenses associated with the animals under the uniform capitalization rules and therefore have a tax basis in the animals subject to a casualty or theft. 2011 tax act When you include livestock in inventory, its last inventory value is its basis. 2011 tax act When you lose an inventoried animal held for draft, breeding, dairy, or sport by casualty or theft during the year, decrease ending inventory by the amount you included in inventory for the animal. 2011 tax act You cannot take a separate deduction. 2011 tax act How To Figure a Loss How you figure a deductible casualty or theft loss depends on whether the loss was to farm or personal-use property and whether the property was stolen or partly or completely destroyed. 2011 tax act Farm property. 2011 tax act   Farm property is the property you use in your farming business. 2011 tax act If your farm property was completely destroyed or stolen, your loss is figured as follows:      Your adjusted basis in the property     MINUS     Any salvage value     MINUS     Any insurance or other reimbursement you  receive or expect to receive      You can use the schedules in Publication 584-B to list your stolen, damaged, or destroyed business property and to figure your loss. 2011 tax act   If your farm property was partially damaged, use the steps shown under Personal-use property next to figure your casualty loss. 2011 tax act However, the deduction limits, discussed later, do not apply to farm property. 2011 tax act Personal-use property. 2011 tax act   Personal-use property is property used by you or your family members for personal purposes and not used in your farm business or for income-producing purposes. 2011 tax act The following items are examples of personal-use property: Your main home. 2011 tax act Furniture and electronics used in your main home and not used in a home office or for business purposes. 2011 tax act Clothing and jewelry. 2011 tax act An automobile used for nonbusiness purposes. 2011 tax act You figure the casualty or theft loss on this property by taking the following steps. 2011 tax act Determine your adjusted basis in the property before the casualty or theft. 2011 tax act Determine the decrease in fair market value of the property as a result of the casualty or theft. 2011 tax act From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you receive or expect to receive. 2011 tax act You must apply the deduction limits, discussed later, to determine your deductible loss. 2011 tax act    You can use Publication 584 to list your stolen or damaged personal-use property and figure your loss. 2011 tax act It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. 2011 tax act Adjusted basis. 2011 tax act   Adjusted basis is your basis (usually cost) increased or decreased by various events, such as improvements and casualty losses. 2011 tax act For more information about adjusted basis, see chapter 6. 2011 tax act Decrease in fair market value (FMV). 2011 tax act   The decrease in FMV is the difference between the property's value immediately before the casualty or theft and its value immediately afterward. 2011 tax act FMV is defined in chapter 10 under Payments Received or Considered Received . 2011 tax act Appraisal. 2011 tax act   To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. 2011 tax act But other measures, such as the cost of cleaning up or making repairs (discussed next) can be used to establish decreases in FMV. 2011 tax act   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. 2011 tax act The appraiser must recognize the effects of any general market decline that may occur along with the casualty. 2011 tax act This information is needed to limit any deduction to the actual loss resulting from damage to the property. 2011 tax act Cost of cleaning up or making repairs. 2011 tax act   The cost of cleaning up after a casualty is not part of a casualty loss. 2011 tax act Neither is the cost of repairing damaged property after a casualty. 2011 tax act 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. 2011 tax act The repairs are actually made. 2011 tax act The repairs are necessary to bring the property back to its condition before the casualty. 2011 tax act The amount spent for repairs is not excessive. 2011 tax act The repairs fix the damage only. 2011 tax act The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. 2011 tax act Related expenses. 2011 tax act   The incidental expenses due to a casualty or theft, such as expenses for the treatment of personal injuries, temporary housing, or a rental car, are not part of your casualty or theft loss. 2011 tax act However, they may be deductible as farm business expenses if the damaged or stolen property is farm property. 2011 tax act Separate computations for more than one item of property. 2011 tax act   Generally, if a single casualty or theft involves more than one item of property, you must figure your loss separately for each item of property. 2011 tax act Then combine the losses to determine your total loss. 2011 tax act    There is an exception to this rule for personal-use real property. 2011 tax act See Exception for personal-use real property, later. 2011 tax act Example. 2011 tax act A fire on your farm damaged a tractor and the barn in which it was stored. 2011 tax act The tractor had an adjusted basis of $3,300. 2011 tax act Its FMV was $28,000 just before the fire and $10,000 immediately afterward. 2011 tax act The barn had an adjusted basis of $28,000. 2011 tax act Its FMV was $55,000 just before the fire and $25,000 immediately afterward. 2011 tax act You received insurance reimbursements of $2,100 on the tractor and $26,000 on the barn. 2011 tax act Figure your deductible casualty loss separately for the two items of property. 2011 tax act     Tractor Barn 1) Adjusted basis $3,300 $28,000 2) FMV before fire $28,000 $55,000 3) FMV after fire 10,000 25,000 4) Decrease in FMV  (line 2 − line 3) $18,000 $30,000 5) Loss (lesser of line 1 or line 4) $3,300 $28,000 6) Minus: Insurance 2,100 26,000 7) Deductible casualty loss $1,200 $2,000 8) Total deductible casualty loss $3,200 Exception for personal-use real property. 2011 tax act   In figuring a casualty loss on personal-use real property, the entire property (including any improvements, such as buildings, trees, and shrubs) is treated as one item. 2011 tax act Figure the loss using the smaller of the following. 2011 tax act The decrease in FMV of the entire property. 2011 tax act The adjusted basis of the entire property. 2011 tax act Example. 2011 tax act You bought a farm in 1990 for $160,000. 2011 tax act The adjusted basis of the residential part is now $128,000. 2011 tax act In 2013, a windstorm blew down shade trees and three ornamental trees planted at a cost of $7,500 on the residential part. 2011 tax act The adjusted basis of the residential part includes the $7,500. 2011 tax act The fair market value (FMV) of the residential part immediately before the storm was $400,000, and $385,000 immediately after the storm. 2011 tax act The trees were not covered by insurance. 2011 tax act 1) Adjusted basis $128,000 2) FMV before the storm $400,000 3) FMV after the storm 385,000 4) Decrease in FMV (line 2 − line 3) $15,000 5) Loss before insurance (lesser of line 1 or line 4) $15,000 6) Minus: Insurance -0- 7) Amount of loss $15,000 Insurance and other reimbursements. 2011 tax act   If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. 2011 tax act You do not have a casualty or theft loss to the extent you are reimbursed. 2011 tax act   If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. 2011 tax act You must reduce your loss even if you do not receive payment until a later tax year. 2011 tax act    Do not subtract from your loss any insurance payments you receive for living expenses if you lose the use of your main home or are denied access to it because of a casualty. 2011 tax act You may have to include a portion of these payments in your income. 2011 tax act See Insurance payments for living expenses in Publication 547 for details. 2011 tax act Disaster relief. 2011 tax act   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. 2011 tax act Excludable cash gifts you receive also do not reduce your casualty loss if there are no limits on how you can use the money. 2011 tax act   Generally, disaster relief grants received under the Robert T. 2011 tax act Stafford Disaster Relief and Emergency Assistance Act are not included in your income. 2011 tax act See Federal disaster relief grants , later, under Disaster Area Losses . 2011 tax act   Qualified disaster relief payments for expenses you incurred as a result of a federally declared disaster are not taxable income to you. 2011 tax act See Qualified disaster relief payments , later, under Disaster Area Losses . 2011 tax act Reimbursement received after deducting loss. 2011 tax act   If you figure your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement. 2011 tax act Actual reimbursement less than expected. 2011 tax act   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. 2011 tax act Actual reimbursement more than expected. 2011 tax act   If you later receive more reimbursement than you expected after you have claimed a deduction for the loss, you may have to include the extra reimbursement in your income for the year you receive it. 2011 tax act However, if any part of your original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. 2011 tax act Do not refigure your tax for the year you claimed the deduction. 2011 tax act See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. 2011 tax act 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. 2011 tax act See Figuring a Gain in Publication 547 for information on how to treat a gain from the reimbursement you receive because of a casualty or theft. 2011 tax act Actual reimbursement same as expected. 2011 tax act   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. 2011 tax act Lump-sum reimbursement. 2011 tax act   If you have a casualty or theft loss of several assets at the same time without an allocation of reimbursement to specific assets, divide the lump-sum reimbursement among the assets according to the fair market value of each asset at the time of the loss. 2011 tax act Figure the gain or loss separately for each asset that has a separate basis. 2011 tax act Adjustments to basis. 2011 tax act   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. 2011 tax act The result is your adjusted basis in the property. 2011 tax act Amounts you spend on repairs to restore your property to its pre-casualty condition increase your adjusted basis. 2011 tax act See Adjusted Basis in chapter 6 for more information. 2011 tax act Example. 2011 tax act You built a new silo for $25,000. 2011 tax act This is the basis in your silo because that is the total cost you incurred to build it. 2011 tax act During the year, a tornado damaged your silo and your allowable casualty loss deduction was $1,000. 2011 tax act In addition, your insurance company reimbursed you $4,000 for the damage and you spent $6,000 to restore the silo to its pre-casualty condition. 2011 tax act Your adjusted basis in the silo after the casualty is $26,000 ($25,000 - $1,000 - $4,000 + $6,000). 2011 tax act Deduction Limits on Losses of Personal-Use Property Casualty and theft losses of property held for personal use may be deductible if you itemize deductions on Schedule A (Form 1040). 2011 tax act There are two limits on the deduction for casualty or theft loss of personal-use property. 2011 tax act You figure these limits on Form 4684. 2011 tax act $100 rule. 2011 tax act   You must reduce each casualty or theft loss on personal-use property by $100. 2011 tax act This rule applies after you have subtracted any reimbursement. 2011 tax act 10% rule. 2011 tax act   You must further reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. 2011 tax act Apply this rule after you reduce each loss by $100. 2011 tax act Adjusted gross income is on line 38 of Form 1040. 2011 tax act Example. 2011 tax act In June, you discovered that your house had been burglarized. 2011 tax act Your loss after insurance reimbursement was $2,000. 2011 tax act Your adjusted gross income for the year you discovered the burglary is $57,000. 2011 tax act Figure your theft loss deduction as follows: 1. 2011 tax act Loss after insurance $2,000 2. 2011 tax act Subtract $100 100 3. 2011 tax act Loss after $100 rule $1,900 4. 2011 tax act Subtract 10% (. 2011 tax act 10) × $57,000 AGI $5,700 5. 2011 tax act Theft loss deduction -0- You do not have a theft loss deduction because your loss ($1,900) is less than 10% of your adjusted gross income ($5,700). 2011 tax act    If you have a casualty or theft gain in addition to a loss, you will have to make a special computation before you figure your 10% limit. 2011 tax act See 10% Rule in Publication 547. 2011 tax act When Loss Is Deductible Generally, you can deduct casualty losses that are not reimbursable only in the tax year in which they occur. 2011 tax act You generally can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. 2011 tax act However, losses in federally declared disaster areas are subject to different rules. 2011 tax act See Disaster Area Losses , later, for an exception. 2011 tax act 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. 2011 tax act Leased property. 2011 tax act   If you lease property from someone else, you can deduct a loss on the property in the year your liability for the loss is fixed. 2011 tax act This is true even if the loss occurred or the liability was paid in a different year. 2011 tax act You are not entitled to a deduction until your liability under the lease can be determined with reasonable accuracy. 2011 tax act Your liability can be determined when a claim for recovery is settled, adjudicated, or abandoned. 2011 tax act Example. 2011 tax act Robert leased a tractor from First Implement, Inc. 2011 tax act , for use in his farm business. 2011 tax act The tractor was destroyed by a tornado in June 2012. 2011 tax act The loss was not insured. 2011 tax act First Implement billed Robert for the fair market value of the tractor on the date of the loss. 2011 tax act Robert disagreed with the bill and refused to pay it. 2011 tax act First Implement later filed suit in court against Robert. 2011 tax act In 2013, Robert and First Implement agreed to settle the suit for $20,000, and the court entered a judgment in favor of First Implement. 2011 tax act Robert paid $20,000 in June 2013. 2011 tax act He can claim the $20,000 as a loss on his 2013 tax return. 2011 tax act Net operating loss (NOL). 2011 tax act   If your deductions, including casualty or theft loss deductions, are more than your income for the year, you may have an NOL. 2011 tax act An NOL can be carried back or carried forward and deducted from income in other years. 2011 tax act See Publication 536 for more information on NOLs. 2011 tax act Proof of Loss To deduct a casualty or theft loss, you must be able to prove that there was a casualty or theft. 2011 tax act You must have records to support the amount you claim for the loss. 2011 tax act Casualty loss proof. 2011 tax act   For a casualty loss, your records should show all the following information. 2011 tax act The type of casualty (car accident, fire, storm, etc. 2011 tax act ) and when it occurred. 2011 tax act That the loss was a direct result of the casualty. 2011 tax act 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. 2011 tax act Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. 2011 tax act Theft loss proof. 2011 tax act   For a theft loss, your records should show all the following information. 2011 tax act When you discovered your property was missing. 2011 tax act That your property was stolen. 2011 tax act That you were the owner of the property. 2011 tax act Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. 2011 tax act Figuring a Gain A casualty or theft may result in a taxable gain. 2011 tax act If you receive an insurance payment or other reimbursement that is more than your adjusted basis in the destroyed, damaged, or stolen property, you have a gain from the casualty or theft. 2011 tax act You generally report your gain as income in the year you receive the reimbursement. 2011 tax act However, depending on the type of property you receive, you may not have to report your gain. 2011 tax act See Postponing Gain , later. 2011 tax act Your gain is figured as follows: The amount you receive, minus Your adjusted basis in the property at the time of the casualty or theft. 2011 tax act Even if the decrease in FMV of your property is smaller than the adjusted basis of your property, use your adjusted basis to figure the gain. 2011 tax act Amount you receive. 2011 tax act   The amount you receive includes any money plus the value of any property you receive, minus any expenses you have in obtaining reimbursement. 2011 tax act It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. 2011 tax act Example. 2011 tax act A tornado severely damaged your barn. 2011 tax act The adjusted basis of the barn was $25,000. 2011 tax act Your insurance company reimbursed you $40,000 for the damaged barn. 2011 tax act However, you had legal expenses of $2,000 to collect that insurance. 2011 tax act Your insurance minus your expenses to collect the insurance is more than your adjusted basis in the barn, so you have a gain. 2011 tax act 1) Insurance reimbursement $40,000 2) Legal expenses 2,000 3) Amount received  (line 1 − line 2) $38,000 4) Adjusted basis 25,000 5) Gain on casualty (line 3 − line 4) $13,000 Other Involuntary Conversions In addition to casualties and thefts, other events cause involuntary conversions of property. 2011 tax act Some of these are discussed in the following paragraphs. 2011 tax act Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes. 2011 tax act You report the gain or deduct the loss on your tax return for the year you realize it. 2011 tax act However, depending on the type of property you receive, you may not have to report your gain on the involuntary conversion. 2011 tax act See Postponing Gain , later. 2011 tax act Condemnation Condemnation is the process by which private property is legally taken for public use without the owner's consent. 2011 tax act The property may be taken by the federal government, a state government, a political subdivision, or a private organization that has the power to legally take property. 2011 tax act The owner receives a condemnation award (money or property) in exchange for the property taken. 2011 tax act A condemnation is a forced sale, the owner being the seller and the condemning authority being the buyer. 2011 tax act Threat of condemnation. 2011 tax act   Treat the sale of your property under threat of condemnation as a condemnation, provided you have reasonable grounds to believe that your property will be condemned. 2011 tax act Main home condemned. 2011 tax act   If you have a gain because your main home is condemned, you generally can exclude the gain from your income as if you had sold or exchanged your home. 2011 tax act For information on this exclusion, see Publication 523. 2011 tax act If your gain is more than the amount you can exclude, but you buy replacement property, you may be able to postpone reporting the excess gain. 2011 tax act See Postponing Gain , later. 2011 tax act (You cannot deduct a loss from the condemnation of your main home. 2011 tax act ) More information. 2011 tax act   For information on how to figure the gain or loss on condemned property, see chapter 1 in Publication 544. 2011 tax act Also see Postponing Gain , later, to find out if you can postpone reporting the gain. 2011 tax act Irrigation Project The sale or other disposition of property located within an irrigation project to conform to the acreage limits of federal reclamation laws is an involuntary conversion. 2011 tax act Livestock Losses Diseased livestock. 2011 tax act   If your livestock die from disease, or are destroyed, sold, or exchanged because of disease, even though the disease is not of epidemic proportions, treat these occurrences as involuntary conversions. 2011 tax act If the livestock were raised or purchased for resale, follow the rules for livestock discussed earlier under Farming Losses . 2011 tax act Otherwise, figure the gain or loss from these conversions using the rules discussed under Determining Gain or Loss in chapter 8. 2011 tax act If you replace the livestock, you may be able to postpone reporting the gain. 2011 tax act See Postponing Gain below. 2011 tax act Reporting dispositions of diseased livestock. 2011 tax act   If you choose to postpone reporting gain on the disposition of diseased livestock, you must attach a statement to your return explaining that the livestock were disposed of because of disease. 2011 tax act You must also include other information on this statement. 2011 tax act See How To Postpone Gain , later, under Postponing Gain . 2011 tax act Weather-related sales of livestock. 2011 tax act   If you sell or exchange livestock (other than poultry) held for draft, breeding, or dairy purposes solely because of drought, flood, or other weather-related conditions, treat the sale or exchange as an involuntary conversion. 2011 tax act Only livestock sold in excess of the number you normally would sell under usual business practice, in the absence of weather-related conditions, are considered involuntary conversions. 2011 tax act Figure the gain or loss using the rules discussed under Determining Gain or Loss in chapter 8. 2011 tax act If you replace the livestock, you may be able to postpone reporting the gain. 2011 tax act See Postponing Gain below. 2011 tax act Example. 2011 tax act It is your usual business practice to sell five of your dairy animals during the year. 2011 tax act This year you sold 20 dairy animals because of drought. 2011 tax act The sale of 15 animals is treated as an involuntary conversion. 2011 tax act    If you do not replace the livestock, you may be able to report the gain in the following year's income. 2011 tax act This rule also applies to other livestock (including poultry). 2011 tax act See Sales Caused by Weather-Related Conditions in chapter 3. 2011 tax act Tree Seedlings If, because of an abnormal drought, the failure of planted tree seedlings is greater than normally anticipated, you may have a deductible loss. 2011 tax act Treat the loss as a loss from an involuntary conversion. 2011 tax act The loss equals the previously capitalized reforestation costs you had to duplicate on replanting. 2011 tax act You deduct the loss on the return for the year the seedlings died. 2011 tax act Postponing Gain Do not report a gain if you receive reimbursement in the form of property similar or related in service or use to the destroyed, stolen, or other involuntarily converted property. 2011 tax act Your basis in the new property is generally the same as your adjusted basis in the property it replaces. 2011 tax act You must ordinarily report the gain on your stolen, destroyed, or other involuntarily converted property if you receive money or unlike property as reimbursement. 2011 tax act However, you can choose to postpone reporting the gain if you purchase replacement property similar or related in service or use to your destroyed, stolen, or other involuntarily converted property within a specific replacement period. 2011 tax act If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. 2011 tax act To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. 2011 tax act If the cost of the replacement property is less than the reimbursement, you must include the gain in your income up to the amount of the unspent reimbursement. 2011 tax act Example 1. 2011 tax act In 1985, you constructed a barn to store farm equipment at a cost of $20,000. 2011 tax act In 1987, you added a silo to the barn at a cost of $15,000 to store grain. 2011 tax act In May of this year, the property was worth $100,000. 2011 tax act In June the barn and silo were destroyed by a tornado. 2011 tax act At the time of the tornado, you had an adjusted basis of $0 in the property. 2011 tax act You received $85,000 from the insurance company. 2011 tax act You had a gain of $85,000 ($85,000 – $0). 2011 tax act You spent $80,000 to rebuild the barn and silo. 2011 tax act Since this is less than the insurance proceeds received, you must include $5,000 ($85,000 – $80,000) in your income. 2011 tax act Example 2. 2011 tax act In 1970, you bought a cabin in the mountains for your personal use at a cost of $18,000. 2011 tax act You made no further improvements or additions to it. 2011 tax act When a storm destroyed the cabin this January, the cabin was worth $250,000. 2011 tax act You received $146,000 from the insurance company in March. 2011 tax act You had a gain of $128,000 ($146,000 − $18,000). 2011 tax act You spent $144,000 to rebuild the cabin. 2011 tax act Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. 2011 tax act Buying replacement property from a related person. 2011 tax act   You cannot postpone reporting a gain from a casualty, theft, or other involuntary conversion if you buy the replacement property from a related person (discussed later). 2011 tax act This rule applies to the following taxpayers. 2011 tax act C corporations. 2011 tax act Partnerships in which more than 50% of the capital or profits interest is owned by C corporations. 2011 tax act Individuals, partnerships (other than those in (2) above), and S corporations if the total realized gain for the tax year on all involuntarily converted properties on which there are realized gains is more than $100,000. 2011 tax act For involuntary conversions described in (3) above, gains cannot be offset by any losses when determining whether the total gain is more than $100,000. 2011 tax act If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. 2011 tax act If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. 2011 tax act Exception. 2011 tax act   This rule does not apply if the related person acquired the property from an unrelated person within the period of time allowed for replacing the involuntarily converted property. 2011 tax act Related persons. 2011 tax act   Under this rule, related persons include, for example, a parent and child, a brother and sister, a corporation and an individual who owns more than 50% of its outstanding stock, and two partnerships in which the same C corporations own more than 50% of the capital or profits interests. 2011 tax act For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. 2011 tax act Death of a taxpayer. 2011 tax act   If a taxpayer dies after having a gain, but before buying replacement property, the gain must be reported for the year in which the decedent realized the gain. 2011 tax act The executor of the estate or the person succeeding to the funds from the involuntary conversion cannot postpone reporting the gain by buying replacement property. 2011 tax act Replacement Property You must buy replacement property for the specific purpose of replacing your property. 2011 tax act Your replacement property must be similar or related in service or use to the property it replaces. 2011 tax act You do not have to use the same funds you receive as reimbursement for your old property to acquire the replacement property. 2011 tax act If you spend the money you receive for other purposes, and borrow money to buy replacement property, you can still choose to postpone reporting the gain if you meet the other requirements. 2011 tax act Property you acquire by gift or inheritance does not qualify as replacement property. 2011 tax act Owner-user. 2011 tax act   If you are an owner-user, similar or related in service or use means that replacement property must function in the same way as the property it replaces. 2011 tax act Examples of property that functions in the same way as the property it replaces are a home that replaces another home, a dairy cow that replaces another dairy cow, and farm land that replaces other farm land. 2011 tax act A grinding mill that replaces a tractor does not qualify. 2011 tax act Neither does a breeding or draft animal that replaces a dairy cow. 2011 tax act Soil or other environmental contamination. 2011 tax act   If, because of soil or other environmental contamination, it is not feasible for you to reinvest your insurance money or other proceeds from destroyed or damaged livestock in property similar or related in service or use to the livestock, you can treat other property (including real property) used for farming purposes, as property similar or related in service or use to the destroyed or damaged livestock. 2011 tax act Weather-related conditions. 2011 tax act   If, because of drought, flood, or other weather-related conditions, it is not feasible for you to reinvest the insurance money or other proceeds in property similar or related in service or use to the livestock, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the livestock you disposed of. 2011 tax act Example. 2011 tax act Each year you normally sell 25 cows from your beef herd. 2011 tax act However, this year you had to sell 50 cows. 2011 tax act This is because a severe drought significantly reduced the amount of hay and pasture yield needed to feed your herd for the rest of the year. 2011 tax act Because, as a result of the severe drought, it is not feasible for you to use the proceeds from selling the extra cows to buy new cows, you can treat other property (excluding real property) used for farming purposes, as property similar or related in service or use to the cows you sold. 2011 tax act Standing crop destroyed by casualty. 2011 tax act   If a storm or other casualty destroyed your standing crop and you use the insurance money to acquire either another standing crop or a harvested crop, this purchase qualifies as replacement property. 2011 tax act The costs of planting and raising a new crop qualify as replacement costs for the destroyed crop only if you use the crop method of accounting (discussed in chapter 2). 2011 tax act In that case, the costs of bringing the new crop to the same level of maturity as the destroyed crop qualify as replacement costs to the extent they are incurred during the replacement period. 2011 tax act Timber loss. 2011 tax act   Standing timber you bought with the proceeds from the sale of timber downed as a result of a casualty, such as high winds, earthquakes, or volcanic eruptions, qualifies as replacement property. 2011 tax act If you bought the standing timber within the replacement period, you can postpone reporting the gain. 2011 tax act Business or income-producing property located in a federally declared disaster area. 2011 tax act   If your destroyed business or income-producing property was located in a federally declared disaster area, any tangible replacement property you acquire for use in any business is treated as similar or related in service or use to the destroyed property. 2011 tax act For more information, see Disaster Area Losses in Publication 547. 2011 tax act Substituting replacement property. 2011 tax act   Once you have acquired qualified replacement property that you designate as replacement property in a statement attached to your tax return, you cannot substitute other qualified replacement property. 2011 tax act This is true even if you acquire the other property within the replacement period. 2011 tax act However, if you discover that the original replacement property was not qualified replacement property, you can, within the replacement period, substitute the new qualified replacement property. 2011 tax act Basis of replacement property. 2011 tax act   You must reduce the basis of your replacement property (its cost) by the amount of postponed gain. 2011 tax act In this way, tax on the gain is postponed until you dispose of the replacement property. 2011 tax act Replacement Period To postpone reporting your gain, you must buy replacement property within a specified period of time. 2011 tax act This is the replacement period. 2011 tax act The replacement period begins on the date your property was damaged, destroyed, stolen, sold, or exchanged. 2011 tax act The replacement period generally ends 2 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. 2011 tax act Example. 2011 tax act You are a calendar year taxpayer. 2011 tax act While you were on vacation, farm equipment that cost $2,200 was stolen from your farm. 2011 tax act You discovered the theft when you returned to your farm on November 11, 2012. 2011 tax act Your insurance company investigated the theft and did not settle your claim until January 5, 2013, when they paid you $3,000. 2011 tax act You first realized a gain from the reimbursement for the theft during 2013, so you have until December 31, 2015, to replace the property. 2011 tax act Main home in disaster area. 2011 tax act   For your main home (or its contents) located in a federally declared disaster area, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the involuntary conversion. 2011 tax act See Disaster Area Losses , later. 2011 tax act Property in the Midwestern disaster areas. 2011 tax act   For property located in the Midwestern disaster areas (defined in Table 4 in the 2008 Publication 547) that was destroyed, damaged, stolen, or condemned, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. 2011 tax act This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Midwestern disaster areas. 2011 tax act Property in the Kansas disaster area. 2011 tax act   For property located in the Kansas disaster area that was destroyed, damaged, stolen, or condemned after May 3, 2007, as a result of the Kansas storms and tornadoes, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. 2011 tax act This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Kansas disaster area. 2011 tax act Property in the Hurricane Katrina disaster area. 2011 tax act   For property located in the Hurricane Katrina disaster area that was destroyed, damaged, stolen, or condemned after August 24, 2005, as a result of Hurricane Katrina, the replacement period ends 5 years after the close of the first tax year in which any part of your gain is realized. 2011 tax act This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. 2011 tax act Weather-related sales of livestock in an area eligible for federal assistance. 2011 tax act   For the sale or exchange of livestock due to drought, flood, or other weather-related conditions in an area eligible for federal assistance, the replacement period ends 4 years after the close of the first tax year in which you realize any part of your gain from the sale or exchange. 2011 tax act The IRS may extend the replacement period on a regional basis if the weather-related conditions continue for longer than 3 years. 2011 tax act   For information on extensions of the replacement period because of persistent drought, see Notice 2006-82, 2006-39 I. 2011 tax act R. 2011 tax act B. 2011 tax act 529, available at  www. 2011 tax act irs. 2011 tax act gov/irb/2006-39_IRB/ar11. 2011 tax act html. 2011 tax act For a list of counties for which exceptional, extreme, or severe drought was reported during the 12 months ending August 31, 2013, see Notice 2013-62, available at IRS. 2011 tax act gov. 2011 tax act Condemnation. 2011 tax act   The replacement period for a condemnation begins on the earlier of the following dates. 2011 tax act The date on which you disposed of the condemned property. 2011 tax act The date on which the threat of condemnation began. 2011 tax act The replacement period generally ends 2 years after the close of the first tax year in which any part of the gain on the condemnation is realized. 2011 tax act But see Main home in disaster area , Property in the Midwestern disaster areas , Property in the Kansas disaster area , and Property in the Hurricane Katrina disaster area , earlier, for exceptions. 2011 tax act Business or investment real property. 2011 tax act   If real property held for use in a trade or business or for investment (not including property held primarily for sale) is condemned, the replacement period ends 3 years after the close of the first tax year in which any part of the gain on the condemnation is realized. 2011 tax act Extension. 2011 tax act   You can apply for an extension of the replacement period. 2011 tax act Send your written application to the Internal Revenue Service Center where you file your tax return. 2011 tax act See your tax return instructions for the address. 2011 tax act Include all the details about your need for an extension. 2011 tax act Make your application before the end of the replacement period. 2011 tax act However, you can file an application within a reasonable time after the replacement period ends if you can show a good reason for the delay. 2011 tax act You will get an extension of the replacement period if you can show reasonable cause for not making the replacement within the regular period. 2011 tax act How To Postpone Gain You postpone reporting your gain by reporting your choice on your tax return for the year you have the gain. 2011 tax act You have the gain in the year you receive insurance proceeds or other reimbursements that result in a gain. 2011 tax act Required statement. 2011 tax act   You should attach a statement to your return for the year you have the gain. 2011 tax act This statement should include all the following information. 2011 tax act The date and details of the casualty, theft, or other involuntary conversion. 2011 tax act The insurance or other reimbursement you received. 2011 tax act How you figured the gain. 2011 tax act Replacement property acquired before return filed. 2011 tax act   If you acquire replacement property before you file your return for the year you have the gain, your statement should also include detailed information about all the following items. 2011 tax act The replacement property. 2011 tax act The postponed gain. 2011 tax act The basis adjustment that reflects the postponed gain. 2011 tax act Any gain you are reporting as income. 2011 tax act Replacement property acquired after return filed. 2011 tax act   If you intend to buy replacement property after you file your return for the year you realize gain, your statement should also say that you are choosing to replace the property within the required replacement period. 2011 tax act   You should then attach another statement to your return for the year in which you buy the replacement property. 2011 tax act This statement should contain detailed information on the replacement property. 2011 tax act If you acquire part of your replacement property in one year and part in another year, you must attach a statement to each year's return. 2011 tax act Include in the statement detailed information on the replacement property bought in that year. 2011 tax act Reporting weather-related sales of livestock. 2011 tax act   If you choose to postpone reporting the gain on weather-related sales or exchanges of livestock, show all the following information on a statement attached to your return for the tax year in which you first realize any of the gain. 2011 tax act Evidence of the weather-related conditions that forced the sale or exchange of the livestock. 2011 tax act The gain realized on the sale or exchange. 2011 tax act The number and kind of livestock sold or exchanged. 2011 tax act The number of livestock of each kind you would have sold or exchanged under your usual business practice. 2011 tax act   Show all the following information and the preceding information on the return for the year in which you replace the livestock. 2011 tax act The dates you bought the replacement property. 2011 tax act The cost of the replacement property. 2011 tax act Description of the replacement property (for example, the number and kind of the replacement livestock). 2011 tax act Amended return. 2011 tax act   You must file an amended return (Form 1040X) for the tax year of the gain in either of the following situations. 2011 tax act You do not acquire replacement property within the replacement period, plus extensions. 2011 tax act On this amended return, you must report the gain and pay any additional tax due. 2011 tax act You acquire replacement property within the required replacement period, plus extensions, but at a cost less than the amount you receive from the casualty, theft, or other involuntary conversion. 2011 tax act On this amended return, you must report the part of the gain that cannot be postponed and pay any additional tax due. 2011 tax act Disaster Area Losses Special rules apply to federally declared disaster area losses. 2011 tax act A federally declared disaster is a disaster that occurred in an area declared by the President to be eligible for federal assistance under the Robert T. 2011 tax act Stafford Disaster Relief and Emergency Assistance Act. 2011 tax act It includes a major disaster or emergency declaration under the act. 2011 tax act A list of the areas warranting public or individual assistance (or both) under the Act is available at the Federal Emergency Management Agency (FEMA) web site at www. 2011 tax act fema. 2011 tax act gov. 2011 tax act This part discusses the special rules for when to deduct a disaster area loss and what tax deadlines may be postponed. 2011 tax act For other special rules, see Disaster Area Losses in Publication 547. 2011 tax act When to deduct the loss. 2011 tax act   You generally must deduct a casualty loss in the year it occurred. 2011 tax act However, if you have a deductible loss from a disaster that occurred in an area warranting public or individual assistance (or both), you can choose to deduct that loss on your return or amended return for the tax year immediately preceding the tax year in which the disaster happened. 2011 tax act If you make this choice, the loss is treated as having occurred in the preceding year. 2011 tax act    Claiming a qualifying disaster loss on the previous year's return may result in a lower tax for that year, often producing or increasing a cash refund. 2011 tax act   You must make the choice to take your casualty loss for the disaster in the preceding year by the later of the following dates. 2011 tax act The due date (without extensions) for filing your tax return for the tax year in which the disaster actually occurred. 2011 tax act The due date (with extensions) for the return for the preceding tax year. 2011 tax act Federal disaster relief grants. 2011 tax act   Do not include post-disaster relief grants received under the Robert T. 2011 tax act Stafford Disaster Relief and Emergency Assistance Act in your income if the grant payments are made to help you meet necessary expenses or serious needs for medical, dental, housing, personal property, transportation, or funeral expenses. 2011 tax act Do not deduct casualty losses or medical expenses to the extent they are specifically reimbursed by these disaster relief grants. 2011 tax act If the casualty loss was specifically reimbursed by the grant and you received the grant after the year in which you deducted the casualty loss, see Reimbursement received after deducting loss , earlier. 2011 tax act Unemployment assistance payments under the Act are taxable unemployment compensation. 2011 tax act Qualified disaster relief payments. 2011 tax act   Qualified disaster relief payments are not included in the income of individuals to the extent any expenses compensated by these payments are not otherwise compensated for by insurance or other reimbursement. 2011 tax act These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). 2011 tax act No withholding applies to these payments. 2011 tax act   Qualified disaster relief payments include payments you receive (regardless of the source) for the following expenses. 2011 tax act Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a federally declared disaster. 2011 tax act Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a federally declared disaster. 2011 tax act (A personal residence can be a rented residence or one you own. 2011 tax act ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a federally declared disaster. 2011 tax act   Qualified disaster relief payments include amounts paid by a federal, state, or local government in connection with a federally declared disaster to individuals affected by the disaster. 2011 tax act    Qualified disaster relief payments do not include: Payments for expenses otherwise paid for by insurance or other reimbursements, or Income replacement payments, such as payments of lost wages, lost business income, or unemployment compensation. 2011 tax act Qualified disaster mitigation payments. 2011 tax act   Qualified disaster mitigation payments made under the Robert T. 2011 tax act Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) are not included in income. 2011 tax act These are payments you, as a property owner, receive to reduce the risk of future damage to your property. 2011 tax act You cannot increase your basis in property, or take a deduction or credit, for expenditures made with respect to those payments. 2011 tax act Sale of property under hazard mitigation program. 2011 tax act   Generally, if you sell or otherwise transfer property, you must recognize any gain or loss for tax purposes unless the property is your main home. 2011 tax act You report the gain or deduct the loss on your tax return for the year you realize it. 2011 tax act (You cannot deduct a loss on personal-use property unless the loss resulted from a casualty, as discussed earlier. 2011 tax act ) However, if you sell or otherwise transfer property to the Federal Government, a state or local government, or an Indian tribal government under a hazard mitigation program, you can choose to postpone reporting the gain if you buy qualifying replacement property within a certain period of time. 2011 tax act See Postponing Gain , earlier, for the rules that apply. 2011 tax act Other federal assistance programs. 2011 tax act    For more information about other federal assistance programs, see Crop Insurance and Crop Disaster Payments and Feed Assistance and Payments in chapter 3 earlier. 2011 tax act Postponed tax deadlines. 2011 tax act   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. 2011 tax act The tax deadlines the IRS may postpone include those for filing income, excise, and employment tax returns, paying income, excise, and employment taxes, and making contributions to a traditional IRA or Roth IRA. 2011 tax act   If any tax deadline is postponed, the IRS will publicize the postponement in your area and publish a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). 2011 tax act Go to http://www. 2011 tax act irs. 2011 tax act gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. 2011 tax act Who is eligible. 2011 tax act   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. 2011 tax act Any individual whose main home is located in a covered disaster area (defined next). 2011 tax act Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. 2011 tax act Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered disaster area. 2011 tax act 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. 2011 tax act The main home or principal place of business does not have to be located in the covered disaster area. 2011 tax act 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. 2011 tax act The spouse on a joint return with a taxpayer who is eligible for postponements. 2011 tax act Any individual, business entity, or sole proprietorship not located in a covered disaster area, but whose necessary records to meet a postponed tax deadline are located in the covered disaster area. 2011 tax act Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. 2011 tax act Any other person determined by the IRS to be affected by a federally declared disaster. 2011 tax act Covered disaster area. 2011 tax act   This is an area of a federally declared disaster area in which the IRS has decided to postpone tax deadlines for up to 1 year. 2011 tax act Abatement of interest and penalties. 2011 tax act   The IRS may abate the interest and penalties on the underpaid income tax for the length of any postponement of tax deadlines. 2011 tax act Reporting Gains and Losses You will have to file one or more of the following forms to report your gains or losses from involuntary conversions. 2011 tax act Form 4684. 2011 tax act   Use this form to report your gains and losses from casualties and thefts. 2011 tax act Form 4797. 2011 tax act   Use this form to report involuntary conversions (other than from casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business or a transaction entered into for profit. 2011 tax act Also use this form if you have a gain from a casualty or theft on trade, business or income-producing property held for more than 1 year and you have to recapture some or all of your gain as ordinary income. 2011 tax act Form 8949. 2011 tax act   Use this form to report gain from an involuntary conversion (other than from casualty or theft) of personal-use property. 2011 tax act Schedule A (Form 1040). 2011 tax act   Use this form to deduct your losses from casualties and thefts of personal-use property and income-producing property, that you reported on Form 4684. 2011 tax act Schedule D (Form 1040). 2011 tax act   Use this form to carry over the following gains. 2011 tax act Net gain shown on Form 4797 from an involuntary conversion of business property held for more than 1 year. 2011 tax act Net gain shown on Form 4684 from the casualty or theft of personal-use property. 2011 tax act    Also use this form to figure the overall gain or loss from transactions reported on Form 8949. 2011 tax act Schedule F (Form 1040). 2011 tax act   Use this form to deduct your losses from casualty or theft of livestock or produce bought for sale under Other expenses in Part II, line 32, if you use the cash method of accounting and have not otherwise deducted these losses. 2011 tax act Prev  Up  Next   Home   More Online Publications
Español

Funeral Planning Checklist

  • Plan ahead.
  • Shop around and compare prices in advance.
  • Ask for a price list.
  • Resist pressure.
  • Avoid emotional overspending.
  • Recognize your rights.
  • Apply the smart shopping techniques you'd use for other major purchases.

Planning a Funeral

One of the most expensive purchases many consumers will ever make is the arrangement of a funeral. A traditional burial, including a casket and vault, costs about $7,000. Extras such as flowers, obituary notices, cards, and limousines can add thousands of dollars more. At such a highly emotional time, many people are easily swayed to believe that their decisions reflect how they feel about the deceased and wind up spending more than necessary.

Most funeral providers are professionals who work to serve their clients' needs and best interests. Unfortunately, some do not. They may take advantage of clients by insisting on unnecessary services, marking up prices and overcharging. That's why there is a federal law, called the Funeral Rule, which regulates the actions of funeral directors, homes and services.

Comparison shopping, either in person or by phone, can save you money and is much easier when done in advance. Many funeral homes will also send you a price list by mail, but this is not required by law.

If you have a problem concerning funeral matters, it's best to try to resolve it first with the funeral director. If you are dissatisfied, the Funeral Consumer's Alliance may be able to advise you on how best to resolve your issue. You can also contact your state or local consumer protection agencies; or the Funeral Service Consumer Assistance Program at 1-800-662-7666. Most states have a licensing board that regulates the funeral industry. You can contact the board in your state for information or help.

Many funeral providers offer a variety of package plans that include products and services that are most commonly sold. Keep in mind, you are not obligated to buy a package plan; you have the right to buy the individual products and services you prefer. As outlined by the Funeral Rule:

  • You have the right to choose the funeral goods and services you want (with some exceptions).
  • The funeral provider must state this "Rule" in writing on the general price list.
  • If state or local law requires you to buy any particular item, the funeral provider must disclose it on the price list, with a reference to the specific law.
  • The funeral provider may not refuse, or charge a fee, to handle a casket that you bought elsewhere.
  • A funeral provider that offers cremations must make alternative containers available.

Planning ahead is the best way to make informed decisions about funeral arrangements. An advanced plan also spares your family from having to make choices while grieving and under time constraints. Every family is different, and funeral arrangements are influenced by religious and cultural traditions, budgets and personal preferences.

You are not legally required to use a funeral home to plan and conduct a funeral. But most people find that the services of a professional funeral home make it easier.

Prepaying for a Funeral

Millions of Americans have entered into contracts to prearrange their funerals and prepay some or all of the expenses involved. Various states have laws to help ensure that these advance payments are available to pay for the funeral products and services when they're needed; however, protections vary widely from state to state. Some state laws require the funeral home or cemetery to place a percentage of the prepayment in a state-regulated trust or to purchase a life insurance policy with the death benefits assigned to the funeral home or cemetery.

The 2011 Tax Act

2011 tax act Publication 542 - Introductory Material Table of Contents Introduction Useful Items - You may want to see: Photographs of missing children. 2011 tax act  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. 2011 tax act Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 2011 tax act You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. 2011 tax act Introduction This publication discusses the general tax laws that apply to ordinary domestic corporations. 2011 tax act It explains the tax law in plain language so it will be easier to understand. 2011 tax act However, the information given does not cover every situation and is not intended to replace the law or change its meaning. 2011 tax act Note. 2011 tax act This publication is not revised on an annual basis. 2011 tax act To find changes that may affect current year returns, see the instructions for your income tax return for the current year; and Changes to Current Forms and Publications at www. 2011 tax act irs. 2011 tax act gov/formspubs. 2011 tax act Comments and suggestions. 2011 tax act   We welcome your comments about this publication and your suggestions for future editions. 2011 tax act   You can write to us at the following address: Internal Revenue Service Business, Exempt Organizations and International Forms and Publications Branch SE:W:CAR:MP:T:B 1111 Constitution Ave. 2011 tax act NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 2011 tax act Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 2011 tax act   You can email us at *taxforms@irs. 2011 tax act gov (The asterisk must be included in the address). 2011 tax act Please put “Publications Comment” on the subject line. 2011 tax act You can also send us comments at www. 2011 tax act irs. 2011 tax act gov/formspubs/. 2011 tax act Select “Comment on Tax Forms and Publications” under “Information about. 2011 tax act ” Although we cannot respond individually to each comment, we do appreciate your feedback and will consider your comments as we revise our tax products. 2011 tax act Tax questions. 2011 tax act   If you have a tax question, visit IRS. 2011 tax act gov or call 1-800-829-1040. 2011 tax act We cannot answer tax questions at either of the addresses listed above. 2011 tax act Ordering forms and publications. 2011 tax act   Visit www. 2011 tax act irs. 2011 tax act gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the National Distribution Center at the address shown under How to Get Tax Help, later in this publication. 2011 tax act Additional forms. 2011 tax act   A list of other forms and statements that a corporation may need to file is included at the end of this publication. 2011 tax act Useful Items - You may want to see: Publication 510 Excise Taxes (Including Fuel Tax Credits and Refunds) 535 Business Expenses 538 Accounting Periods and Methods 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 925 Passive Activity and At-Risk Rules 946 How to Depreciate Property Prev  Up  Next   Home   More Online Publications