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Back tax home 11. Back tax home   Casualties, Thefts, and Condemnations Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Casualties and TheftsDeductible losses. Back tax home Nondeductible losses. Back tax home Family pet. Back tax home Progressive deterioration. Back tax home Decline in market value of stock. Back tax home Mislaid or lost property. Back tax home 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. Back tax home Related persons. Back tax home Replacement Property Replacement Period How To Postpone Gain Disaster Area LossesWho is eligible. Back tax home Covered disaster area. Back tax home Reporting Gains and Losses Introduction This chapter explains the tax treatment of casualties, thefts, and condemnations. Back tax home A casualty occurs when property is damaged, destroyed, or lost due to a sudden, unexpected, or unusual event. Back tax home A theft occurs when property is stolen. Back tax home A condemnation occurs when private property is legally taken for public use without the owner's consent. Back tax home A casualty, theft, or condemnation may result in a deductible loss or taxable gain on your federal income tax return. Back tax home 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. Back tax home 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. Back tax home 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. Back tax home For more information, see Postponing Gain , later. Back tax home 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. Back tax home Casualties and Thefts If your property is destroyed, damaged, or stolen, you may have a deductible loss. Back tax home 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. Back tax home Casualty. Back tax home   A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Back tax home A sudden event is one that is swift, not gradual or progressive. Back tax home An unexpected event is one that is ordinarily unanticipated and unintended. Back tax home 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. Back tax home Deductible losses. Back tax home   Deductible casualty losses can result from a number of different causes, including the following. Back tax home Airplane crashes. Back tax home Car, truck, or farm equipment accidents not resulting from your willful act or willful negligence. Back tax home Earthquakes. Back tax home Fires (but see Nondeductible losses next for exceptions). Back tax home Floods. Back tax home Freezing. Back tax home 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. Back tax home Lightning. Back tax home Storms, including hurricanes and tornadoes. Back tax home Terrorist attacks. Back tax home Vandalism. Back tax home Volcanic eruptions. Back tax home Nondeductible losses. Back tax home   A casualty loss is not deductible if the damage or destruction is caused by the following. Back tax home Accidentally breaking articles such as glassware or china under normal conditions. Back tax home A family pet (explained below). Back tax home A fire if you willfully set it, or pay someone else to set it. Back tax home A car, truck, or farm equipment accident if your willful negligence or willful act caused it. Back tax home The same is true if the willful act or willful negligence of someone acting for you caused the accident. Back tax home Progressive deterioration (explained below). Back tax home Family pet. Back tax home   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. Back tax home Example. Back tax home You keep your horse in your yard. Back tax home The ornamental fruit trees in your yard were damaged when your horse stripped the bark from them. Back tax home Some of the trees were completely girdled and died. Back tax home Because the damage was not unexpected or unusual, the loss is not deductible. Back tax home Progressive deterioration. Back tax home   Loss of property due to progressive deterioration is not deductible as a casualty loss. Back tax home This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Back tax home Examples of damage due to progressive deterioration include damage from rust, corrosion, or termites. Back tax home However, weather-related conditions or disease may cause another type of involuntary conversion. Back tax home See Other Involuntary Conversions , later. Back tax home Theft. Back tax home   A theft is the taking and removing of money or property with the intent to deprive the owner of it. Back tax home 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. Back tax home You do not need to show a conviction for theft. Back tax home   Theft includes the taking of money or property by the following means: Blackmail, Burglary, Embezzlement, Extortion, Kidnapping for ransom, Larceny, Robbery, or Threats. Back tax home The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Back tax home Decline in market value of stock. Back tax home   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. Back tax home 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. Back tax home You report a capital loss on Schedule D (Form 1040). Back tax home For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Back tax home Mislaid or lost property. Back tax home   The simple disappearance of money or property is not a theft. Back tax home 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. Back tax home Example. Back tax home A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Back tax home The diamond falls from the ring and is never found. Back tax home The loss of the diamond is a casualty. Back tax home Farming Losses You can deduct certain casualty or theft losses that occur in the business of farming. Back tax home The following is a discussion of some losses you can deduct and some you cannot deduct. Back tax home Livestock or produce bought for resale. Back tax home   Casualty or theft losses of livestock or produce bought for resale are deductible if you report your income on the cash method. Back tax home 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. Back tax home You cannot take a separate deduction. Back tax home Livestock, plants, produce, and crops raised for sale. Back tax home   Losses of livestock, plants, produce, and crops raised for sale are generally not deductible if you report your income on the cash method. Back tax home You have already deducted the cost of raising these items as farm expenses, so their basis is equal to zero. Back tax home   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. Back tax home You usually have a tax basis if you capitalized the expenses associated with these plants under the uniform capitalization rules. Back tax home The uniform capitalization rules are discussed in chapter 6. Back tax home   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. Back tax home You get the deduction by omitting the item from your inventory at the close of your tax year. Back tax home You cannot take a separate casualty or theft deduction. Back tax home Income loss. Back tax home   A loss of future income is not deductible. Back tax home Example. Back tax home A severe flood destroyed your crops. Back tax home 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 . Back tax home You estimate that the crop loss will reduce your farm income by $25,000. Back tax home This loss of future income is also not deductible. Back tax home Loss of timber. Back tax home   If you sell timber downed as a result of a casualty, treat the proceeds from the sale as a reimbursement. Back tax home If you use the proceeds to buy qualified replacement property, you can postpone reporting the gain. Back tax home See Postponing Gain , later. Back tax home Property used in farming. Back tax home   Casualty and theft losses of property used in your farm business usually result in deductible losses. Back tax home 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. Back tax home See How To Figure a Loss , later. Back tax home Raised draft, breeding, dairy, or sporting animals. Back tax home   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. Back tax home 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. Back tax home You use inventories to determine your income and you included the animals in your inventory. Back tax home 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. Back tax home When you include livestock in inventory, its last inventory value is its basis. Back tax home 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. Back tax home You cannot take a separate deduction. Back tax home 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. Back tax home Farm property. Back tax home   Farm property is the property you use in your farming business. Back tax home 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. Back tax home   If your farm property was partially damaged, use the steps shown under Personal-use property next to figure your casualty loss. Back tax home However, the deduction limits, discussed later, do not apply to farm property. Back tax home Personal-use property. Back tax home   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. Back tax home The following items are examples of personal-use property: Your main home. Back tax home Furniture and electronics used in your main home and not used in a home office or for business purposes. Back tax home Clothing and jewelry. Back tax home An automobile used for nonbusiness purposes. Back tax home You figure the casualty or theft loss on this property by taking the following steps. Back tax home Determine your adjusted basis in the property before the casualty or theft. Back tax home Determine the decrease in fair market value of the property as a result of the casualty or theft. Back tax home From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you receive or expect to receive. Back tax home You must apply the deduction limits, discussed later, to determine your deductible loss. Back tax home    You can use Publication 584 to list your stolen or damaged personal-use property and figure your loss. Back tax home It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. Back tax home Adjusted basis. Back tax home   Adjusted basis is your basis (usually cost) increased or decreased by various events, such as improvements and casualty losses. Back tax home For more information about adjusted basis, see chapter 6. Back tax home Decrease in fair market value (FMV). Back tax home   The decrease in FMV is the difference between the property's value immediately before the casualty or theft and its value immediately afterward. Back tax home FMV is defined in chapter 10 under Payments Received or Considered Received . Back tax home Appraisal. Back tax home   To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Back tax home But other measures, such as the cost of cleaning up or making repairs (discussed next) can be used to establish decreases in FMV. Back tax home   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. Back tax home The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Back tax home This information is needed to limit any deduction to the actual loss resulting from damage to the property. Back tax home Cost of cleaning up or making repairs. Back tax home   The cost of cleaning up after a casualty is not part of a casualty loss. Back tax home Neither is the cost of repairing damaged property after a casualty. Back tax home 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. Back tax home The repairs are actually made. Back tax home The repairs are necessary to bring the property back to its condition before the casualty. Back tax home The amount spent for repairs is not excessive. Back tax home The repairs fix the damage only. Back tax home The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Back tax home Related expenses. Back tax home   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. Back tax home However, they may be deductible as farm business expenses if the damaged or stolen property is farm property. Back tax home Separate computations for more than one item of property. Back tax home   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. Back tax home Then combine the losses to determine your total loss. Back tax home    There is an exception to this rule for personal-use real property. Back tax home See Exception for personal-use real property, later. Back tax home Example. Back tax home A fire on your farm damaged a tractor and the barn in which it was stored. Back tax home The tractor had an adjusted basis of $3,300. Back tax home Its FMV was $28,000 just before the fire and $10,000 immediately afterward. Back tax home The barn had an adjusted basis of $28,000. Back tax home Its FMV was $55,000 just before the fire and $25,000 immediately afterward. Back tax home You received insurance reimbursements of $2,100 on the tractor and $26,000 on the barn. Back tax home Figure your deductible casualty loss separately for the two items of property. Back tax home     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. Back tax home   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. Back tax home Figure the loss using the smaller of the following. Back tax home The decrease in FMV of the entire property. Back tax home The adjusted basis of the entire property. Back tax home Example. Back tax home You bought a farm in 1990 for $160,000. Back tax home The adjusted basis of the residential part is now $128,000. Back tax home In 2013, a windstorm blew down shade trees and three ornamental trees planted at a cost of $7,500 on the residential part. Back tax home The adjusted basis of the residential part includes the $7,500. Back tax home The fair market value (FMV) of the residential part immediately before the storm was $400,000, and $385,000 immediately after the storm. Back tax home The trees were not covered by insurance. Back tax home 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. Back tax home   If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Back tax home You do not have a casualty or theft loss to the extent you are reimbursed. Back tax home   If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Back tax home You must reduce your loss even if you do not receive payment until a later tax year. Back tax home    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. Back tax home You may have to include a portion of these payments in your income. Back tax home See Insurance payments for living expenses in Publication 547 for details. Back tax home Disaster relief. Back tax home   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. Back tax home Excludable cash gifts you receive also do not reduce your casualty loss if there are no limits on how you can use the money. Back tax home   Generally, disaster relief grants received under the Robert T. Back tax home Stafford Disaster Relief and Emergency Assistance Act are not included in your income. Back tax home See Federal disaster relief grants , later, under Disaster Area Losses . Back tax home   Qualified disaster relief payments for expenses you incurred as a result of a federally declared disaster are not taxable income to you. Back tax home See Qualified disaster relief payments , later, under Disaster Area Losses . Back tax home Reimbursement received after deducting loss. Back tax home   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. Back tax home Actual reimbursement less than expected. Back tax home   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. Back tax home Actual reimbursement more than expected. Back tax home   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. Back tax home 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. Back tax home Do not refigure your tax for the year you claimed the deduction. Back tax home See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. Back tax home 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. Back tax home 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. Back tax home Actual reimbursement same as expected. Back tax home   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. Back tax home Lump-sum reimbursement. Back tax home   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. Back tax home Figure the gain or loss separately for each asset that has a separate basis. Back tax home Adjustments to basis. Back tax home   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. Back tax home The result is your adjusted basis in the property. Back tax home Amounts you spend on repairs to restore your property to its pre-casualty condition increase your adjusted basis. Back tax home See Adjusted Basis in chapter 6 for more information. Back tax home Example. Back tax home You built a new silo for $25,000. Back tax home This is the basis in your silo because that is the total cost you incurred to build it. Back tax home During the year, a tornado damaged your silo and your allowable casualty loss deduction was $1,000. Back tax home 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. Back tax home Your adjusted basis in the silo after the casualty is $26,000 ($25,000 - $1,000 - $4,000 + $6,000). Back tax home 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). Back tax home There are two limits on the deduction for casualty or theft loss of personal-use property. Back tax home You figure these limits on Form 4684. Back tax home $100 rule. Back tax home   You must reduce each casualty or theft loss on personal-use property by $100. Back tax home This rule applies after you have subtracted any reimbursement. Back tax home 10% rule. Back tax home   You must further reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Back tax home Apply this rule after you reduce each loss by $100. Back tax home Adjusted gross income is on line 38 of Form 1040. Back tax home Example. Back tax home In June, you discovered that your house had been burglarized. Back tax home Your loss after insurance reimbursement was $2,000. Back tax home Your adjusted gross income for the year you discovered the burglary is $57,000. Back tax home Figure your theft loss deduction as follows: 1. Back tax home Loss after insurance $2,000 2. Back tax home Subtract $100 100 3. Back tax home Loss after $100 rule $1,900 4. Back tax home Subtract 10% (. Back tax home 10) × $57,000 AGI $5,700 5. Back tax home 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). Back tax home    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. Back tax home See 10% Rule in Publication 547. Back tax home When Loss Is Deductible Generally, you can deduct casualty losses that are not reimbursable only in the tax year in which they occur. Back tax home You generally can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. Back tax home However, losses in federally declared disaster areas are subject to different rules. Back tax home See Disaster Area Losses , later, for an exception. Back tax home 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. Back tax home Leased property. Back tax home   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. Back tax home This is true even if the loss occurred or the liability was paid in a different year. Back tax home You are not entitled to a deduction until your liability under the lease can be determined with reasonable accuracy. Back tax home Your liability can be determined when a claim for recovery is settled, adjudicated, or abandoned. Back tax home Example. Back tax home Robert leased a tractor from First Implement, Inc. Back tax home , for use in his farm business. Back tax home The tractor was destroyed by a tornado in June 2012. Back tax home The loss was not insured. Back tax home First Implement billed Robert for the fair market value of the tractor on the date of the loss. Back tax home Robert disagreed with the bill and refused to pay it. Back tax home First Implement later filed suit in court against Robert. Back tax home 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. Back tax home Robert paid $20,000 in June 2013. Back tax home He can claim the $20,000 as a loss on his 2013 tax return. Back tax home Net operating loss (NOL). Back tax home   If your deductions, including casualty or theft loss deductions, are more than your income for the year, you may have an NOL. Back tax home An NOL can be carried back or carried forward and deducted from income in other years. Back tax home See Publication 536 for more information on NOLs. Back tax home Proof of Loss To deduct a casualty or theft loss, you must be able to prove that there was a casualty or theft. Back tax home You must have records to support the amount you claim for the loss. Back tax home Casualty loss proof. Back tax home   For a casualty loss, your records should show all the following information. Back tax home The type of casualty (car accident, fire, storm, etc. Back tax home ) and when it occurred. Back tax home That the loss was a direct result of the casualty. Back tax home 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. Back tax home Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Back tax home Theft loss proof. Back tax home   For a theft loss, your records should show all the following information. Back tax home When you discovered your property was missing. Back tax home That your property was stolen. Back tax home That you were the owner of the property. Back tax home Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Back tax home Figuring a Gain A casualty or theft may result in a taxable gain. Back tax home 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. Back tax home You generally report your gain as income in the year you receive the reimbursement. Back tax home However, depending on the type of property you receive, you may not have to report your gain. Back tax home See Postponing Gain , later. Back tax home 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. Back tax home 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. Back tax home Amount you receive. Back tax home   The amount you receive includes any money plus the value of any property you receive, minus any expenses you have in obtaining reimbursement. Back tax home It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. Back tax home Example. Back tax home A tornado severely damaged your barn. Back tax home The adjusted basis of the barn was $25,000. Back tax home Your insurance company reimbursed you $40,000 for the damaged barn. Back tax home However, you had legal expenses of $2,000 to collect that insurance. Back tax home Your insurance minus your expenses to collect the insurance is more than your adjusted basis in the barn, so you have a gain. Back tax home 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. Back tax home Some of these are discussed in the following paragraphs. Back tax home Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes. Back tax home You report the gain or deduct the loss on your tax return for the year you realize it. Back tax home However, depending on the type of property you receive, you may not have to report your gain on the involuntary conversion. Back tax home See Postponing Gain , later. Back tax home Condemnation Condemnation is the process by which private property is legally taken for public use without the owner's consent. Back tax home 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. Back tax home The owner receives a condemnation award (money or property) in exchange for the property taken. Back tax home A condemnation is a forced sale, the owner being the seller and the condemning authority being the buyer. Back tax home Threat of condemnation. Back tax home   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. Back tax home Main home condemned. Back tax home   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. Back tax home For information on this exclusion, see Publication 523. Back tax home 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. Back tax home See Postponing Gain , later. Back tax home (You cannot deduct a loss from the condemnation of your main home. Back tax home ) More information. Back tax home   For information on how to figure the gain or loss on condemned property, see chapter 1 in Publication 544. Back tax home Also see Postponing Gain , later, to find out if you can postpone reporting the gain. Back tax home 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. Back tax home Livestock Losses Diseased livestock. Back tax home   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. Back tax home If the livestock were raised or purchased for resale, follow the rules for livestock discussed earlier under Farming Losses . Back tax home Otherwise, figure the gain or loss from these conversions using the rules discussed under Determining Gain or Loss in chapter 8. Back tax home If you replace the livestock, you may be able to postpone reporting the gain. Back tax home See Postponing Gain below. Back tax home Reporting dispositions of diseased livestock. Back tax home   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. Back tax home You must also include other information on this statement. Back tax home See How To Postpone Gain , later, under Postponing Gain . Back tax home Weather-related sales of livestock. Back tax home   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. Back tax home 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. Back tax home Figure the gain or loss using the rules discussed under Determining Gain or Loss in chapter 8. Back tax home If you replace the livestock, you may be able to postpone reporting the gain. Back tax home See Postponing Gain below. Back tax home Example. Back tax home It is your usual business practice to sell five of your dairy animals during the year. Back tax home This year you sold 20 dairy animals because of drought. Back tax home The sale of 15 animals is treated as an involuntary conversion. Back tax home    If you do not replace the livestock, you may be able to report the gain in the following year's income. Back tax home This rule also applies to other livestock (including poultry). Back tax home See Sales Caused by Weather-Related Conditions in chapter 3. Back tax home 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. Back tax home Treat the loss as a loss from an involuntary conversion. Back tax home The loss equals the previously capitalized reforestation costs you had to duplicate on replanting. Back tax home You deduct the loss on the return for the year the seedlings died. Back tax home 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. Back tax home Your basis in the new property is generally the same as your adjusted basis in the property it replaces. Back tax home You must ordinarily report the gain on your stolen, destroyed, or other involuntarily converted property if you receive money or unlike property as reimbursement. Back tax home 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. Back tax home If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. Back tax home To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. Back tax home 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. Back tax home Example 1. Back tax home In 1985, you constructed a barn to store farm equipment at a cost of $20,000. Back tax home In 1987, you added a silo to the barn at a cost of $15,000 to store grain. Back tax home In May of this year, the property was worth $100,000. Back tax home In June the barn and silo were destroyed by a tornado. Back tax home At the time of the tornado, you had an adjusted basis of $0 in the property. Back tax home You received $85,000 from the insurance company. Back tax home You had a gain of $85,000 ($85,000 – $0). Back tax home You spent $80,000 to rebuild the barn and silo. Back tax home Since this is less than the insurance proceeds received, you must include $5,000 ($85,000 – $80,000) in your income. Back tax home Example 2. Back tax home In 1970, you bought a cabin in the mountains for your personal use at a cost of $18,000. Back tax home You made no further improvements or additions to it. Back tax home When a storm destroyed the cabin this January, the cabin was worth $250,000. Back tax home You received $146,000 from the insurance company in March. Back tax home You had a gain of $128,000 ($146,000 − $18,000). Back tax home You spent $144,000 to rebuild the cabin. Back tax home Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. Back tax home Buying replacement property from a related person. Back tax home   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). Back tax home This rule applies to the following taxpayers. Back tax home C corporations. Back tax home Partnerships in which more than 50% of the capital or profits interest is owned by C corporations. Back tax home 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. Back tax home 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. Back tax home If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. Back tax home If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. Back tax home Exception. Back tax home   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. Back tax home Related persons. Back tax home   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. Back tax home For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Back tax home Death of a taxpayer. Back tax home   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. Back tax home 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. Back tax home Replacement Property You must buy replacement property for the specific purpose of replacing your property. Back tax home Your replacement property must be similar or related in service or use to the property it replaces. Back tax home You do not have to use the same funds you receive as reimbursement for your old property to acquire the replacement property. Back tax home 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. Back tax home Property you acquire by gift or inheritance does not qualify as replacement property. Back tax home Owner-user. Back tax home   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. Back tax home 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. Back tax home A grinding mill that replaces a tractor does not qualify. Back tax home Neither does a breeding or draft animal that replaces a dairy cow. Back tax home Soil or other environmental contamination. Back tax home   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. Back tax home Weather-related conditions. Back tax home   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. Back tax home Example. Back tax home Each year you normally sell 25 cows from your beef herd. Back tax home However, this year you had to sell 50 cows. Back tax home 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. Back tax home 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. Back tax home Standing crop destroyed by casualty. Back tax home   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. Back tax home 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). Back tax home 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. Back tax home Timber loss. Back tax home   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. Back tax home If you bought the standing timber within the replacement period, you can postpone reporting the gain. Back tax home Business or income-producing property located in a federally declared disaster area. Back tax home   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. Back tax home For more information, see Disaster Area Losses in Publication 547. Back tax home Substituting replacement property. Back tax home   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. Back tax home This is true even if you acquire the other property within the replacement period. Back tax home 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. Back tax home Basis of replacement property. Back tax home   You must reduce the basis of your replacement property (its cost) by the amount of postponed gain. Back tax home In this way, tax on the gain is postponed until you dispose of the replacement property. Back tax home Replacement Period To postpone reporting your gain, you must buy replacement property within a specified period of time. Back tax home This is the replacement period. Back tax home The replacement period begins on the date your property was damaged, destroyed, stolen, sold, or exchanged. Back tax home 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. Back tax home Example. Back tax home You are a calendar year taxpayer. Back tax home While you were on vacation, farm equipment that cost $2,200 was stolen from your farm. Back tax home You discovered the theft when you returned to your farm on November 11, 2012. Back tax home Your insurance company investigated the theft and did not settle your claim until January 5, 2013, when they paid you $3,000. Back tax home You first realized a gain from the reimbursement for the theft during 2013, so you have until December 31, 2015, to replace the property. Back tax home Main home in disaster area. Back tax home   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. Back tax home See Disaster Area Losses , later. Back tax home Property in the Midwestern disaster areas. Back tax home   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. Back tax home This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Midwestern disaster areas. Back tax home Property in the Kansas disaster area. Back tax home   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. Back tax home This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Kansas disaster area. Back tax home Property in the Hurricane Katrina disaster area. Back tax home   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. Back tax home This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. Back tax home Weather-related sales of livestock in an area eligible for federal assistance. Back tax home   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. Back tax home The IRS may extend the replacement period on a regional basis if the weather-related conditions continue for longer than 3 years. Back tax home   For information on extensions of the replacement period because of persistent drought, see Notice 2006-82, 2006-39 I. Back tax home R. Back tax home B. Back tax home 529, available at  www. Back tax home irs. Back tax home gov/irb/2006-39_IRB/ar11. Back tax home html. Back tax home 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. Back tax home gov. Back tax home Condemnation. Back tax home   The replacement period for a condemnation begins on the earlier of the following dates. Back tax home The date on which you disposed of the condemned property. Back tax home The date on which the threat of condemnation began. Back tax home 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. Back tax home 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. Back tax home Business or investment real property. Back tax home   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. Back tax home Extension. Back tax home   You can apply for an extension of the replacement period. Back tax home Send your written application to the Internal Revenue Service Center where you file your tax return. Back tax home See your tax return instructions for the address. Back tax home Include all the details about your need for an extension. Back tax home Make your application before the end of the replacement period. Back tax home 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. Back tax home You will get an extension of the replacement period if you can show reasonable cause for not making the replacement within the regular period. Back tax home How To Postpone Gain You postpone reporting your gain by reporting your choice on your tax return for the year you have the gain. Back tax home You have the gain in the year you receive insurance proceeds or other reimbursements that result in a gain. Back tax home Required statement. Back tax home   You should attach a statement to your return for the year you have the gain. Back tax home This statement should include all the following information. Back tax home The date and details of the casualty, theft, or other involuntary conversion. Back tax home The insurance or other reimbursement you received. Back tax home How you figured the gain. Back tax home Replacement property acquired before return filed. Back tax home   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. Back tax home The replacement property. Back tax home The postponed gain. Back tax home The basis adjustment that reflects the postponed gain. Back tax home Any gain you are reporting as income. Back tax home Replacement property acquired after return filed. Back tax home   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. Back tax home   You should then attach another statement to your return for the year in which you buy the replacement property. Back tax home This statement should contain detailed information on the replacement property. Back tax home 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. Back tax home Include in the statement detailed information on the replacement property bought in that year. Back tax home Reporting weather-related sales of livestock. Back tax home   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. Back tax home Evidence of the weather-related conditions that forced the sale or exchange of the livestock. Back tax home The gain realized on the sale or exchange. Back tax home The number and kind of livestock sold or exchanged. Back tax home The number of livestock of each kind you would have sold or exchanged under your usual business practice. Back tax home   Show all the following information and the preceding information on the return for the year in which you replace the livestock. Back tax home The dates you bought the replacement property. Back tax home The cost of the replacement property. Back tax home Description of the replacement property (for example, the number and kind of the replacement livestock). Back tax home Amended return. Back tax home   You must file an amended return (Form 1040X) for the tax year of the gain in either of the following situations. Back tax home You do not acquire replacement property within the replacement period, plus extensions. Back tax home On this amended return, you must report the gain and pay any additional tax due. Back tax home 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. Back tax home On this amended return, you must report the part of the gain that cannot be postponed and pay any additional tax due. Back tax home Disaster Area Losses Special rules apply to federally declared disaster area losses. Back tax home 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. Back tax home Stafford Disaster Relief and Emergency Assistance Act. Back tax home It includes a major disaster or emergency declaration under the act. Back tax home 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. Back tax home fema. Back tax home gov. Back tax home This part discusses the special rules for when to deduct a disaster area loss and what tax deadlines may be postponed. Back tax home For other special rules, see Disaster Area Losses in Publication 547. Back tax home When to deduct the loss. Back tax home   You generally must deduct a casualty loss in the year it occurred. Back tax home 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. Back tax home If you make this choice, the loss is treated as having occurred in the preceding year. Back tax home    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. Back tax home   You must make the choice to take your casualty loss for the disaster in the preceding year by the later of the following dates. Back tax home The due date (without extensions) for filing your tax return for the tax year in which the disaster actually occurred. Back tax home The due date (with extensions) for the return for the preceding tax year. Back tax home Federal disaster relief grants. Back tax home   Do not include post-disaster relief grants received under the Robert T. Back tax home 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. Back tax home Do not deduct casualty losses or medical expenses to the extent they are specifically reimbursed by these disaster relief grants. Back tax home 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. Back tax home Unemployment assistance payments under the Act are taxable unemployment compensation. Back tax home Qualified disaster relief payments. Back tax home   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. Back tax home These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). Back tax home No withholding applies to these payments. Back tax home   Qualified disaster relief payments include payments you receive (regardless of the source) for the following expenses. Back tax home Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a federally declared disaster. Back tax home Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a federally declared disaster. Back tax home (A personal residence can be a rented residence or one you own. Back tax home ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a federally declared disaster. Back tax home   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. Back tax home    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. Back tax home Qualified disaster mitigation payments. Back tax home   Qualified disaster mitigation payments made under the Robert T. Back tax home 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. Back tax home These are payments you, as a property owner, receive to reduce the risk of future damage to your property. Back tax home You cannot increase your basis in property, or take a deduction or credit, for expenditures made with respect to those payments. Back tax home Sale of property under hazard mitigation program. Back tax home   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. Back tax home You report the gain or deduct the loss on your tax return for the year you realize it. Back tax home (You cannot deduct a loss on personal-use property unless the loss resulted from a casualty, as discussed earlier. Back tax home ) 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. Back tax home See Postponing Gain , earlier, for the rules that apply. Back tax home Other federal assistance programs. Back tax home    For more information about other federal assistance programs, see Crop Insurance and Crop Disaster Payments and Feed Assistance and Payments in chapter 3 earlier. Back tax home Postponed tax deadlines. Back tax home   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. Back tax home 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. Back tax home   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). Back tax home Go to http://www. Back tax home irs. Back tax home gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. Back tax home Who is eligible. Back tax home   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Back tax home Any individual whose main home is located in a covered disaster area (defined next). Back tax home Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Back tax home Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered disaster area. Back tax home 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. Back tax home The main home or principal place of business does not have to be located in the covered disaster area. Back tax home 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. Back tax home The spouse on a joint return with a taxpayer who is eligible for postponements. Back tax home 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. Back tax home Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. Back tax home Any other person determined by the IRS to be affected by a federally declared disaster. Back tax home Covered disaster area. Back tax home   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. Back tax home Abatement of interest and penalties. Back tax home   The IRS may abate the interest and penalties on the underpaid income tax for the length of any postponement of tax deadlines. Back tax home 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. Back tax home Form 4684. Back tax home   Use this form to report your gains and losses from casualties and thefts. Back tax home Form 4797. Back tax home   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. Back tax home 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. Back tax home Form 8949. Back tax home   Use this form to report gain from an involuntary conversion (other than from casualty or theft) of personal-use property. Back tax home Schedule A (Form 1040). Back tax home   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. Back tax home Schedule D (Form 1040). Back tax home   Use this form to carry over the following gains. Back tax home Net gain shown on Form 4797 from an involuntary conversion of business property held for more than 1 year. Back tax home Net gain shown on Form 4684 from the casualty or theft of personal-use property. Back tax home    Also use this form to figure the overall gain or loss from transactions reported on Form 8949. Back tax home Schedule F (Form 1040). Back tax home   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. Back tax home Prev  Up  Next   Home   More Online Publications