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Military Pay Chart

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Military Pay Chart

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The Military Pay Chart

Military pay chart Publication 547 - Main Content Table of Contents CasualtyFamily pet. Military pay chart Progressive deterioration. Military pay chart Special Procedure for Damage From Corrosive Drywall Theft Loss on Deposits Proof of Loss Figuring a LossGain from reimbursement. Military pay chart Business or income-producing property. Military pay chart Loss of inventory. Military pay chart Leased property. Military pay chart Exception for personal-use real property. Military pay chart Decrease in Fair Market Value Adjusted Basis Insurance and Other Reimbursements Deduction Limits2% Rule $100 Rule 10% Rule Figuring the Deduction Figuring a GainPostponement of Gain When To Report Gains and LossesLoss on deposits. Military pay chart Lessee's loss. Military pay chart Disaster Area LossesDisaster loss to inventory. Military pay chart Main home in disaster area. Military pay chart Unsafe home. Military pay chart Time limit for making choice. Military pay chart Revoking your choice. Military pay chart Figuring the loss deduction. Military pay chart How to report the loss on Form 1040X. Military pay chart Records. Military pay chart Need a copy of your tax return for the preceding year? Postponed Tax Deadlines Contacting the Federal Emergency Management Agency (FEMA) How To Report Gains and LossesProperty held 1 year or less. Military pay chart Property held more than 1 year. Military pay chart Depreciable property. Military pay chart Adjustments to Basis If Deductions Are More Than Income How To Get Tax HelpLow Income Taxpayer Clinics Casualty A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Military pay chart A sudden event is one that is swift, not gradual or progressive. Military pay chart An unexpected event is one that is ordinarily unanticipated and unintended. Military pay chart 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. Military pay chart Generally, casualty losses are deductible during the taxable year that the loss occurred. Military pay chart See Table 3, later. Military pay chart Deductible losses. Military pay chart   Deductible casualty losses can result from a number of different causes, including the following. Military pay chart Car accidents (but see Nondeductible losses , next, for exceptions). Military pay chart Earthquakes. Military pay chart Fires (but see Nondeductible losses , next, for exceptions). Military pay chart Floods. Military pay chart Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster as discussed under Disaster Area Losses , later. Military pay chart Mine cave-ins. Military pay chart Shipwrecks. Military pay chart Sonic booms. Military pay chart Storms, including hurricanes and tornadoes. Military pay chart Terrorist attacks. Military pay chart Vandalism. Military pay chart Volcanic eruptions. Military pay chart Nondeductible losses. Military pay chart   A casualty loss is not deductible if the damage or destruction is caused by the following. Military pay chart Accidentally breaking articles such as glassware or china under normal conditions. Military pay chart A family pet (explained below). Military pay chart A fire if you willfully set it, or pay someone else to set it. Military pay chart A car accident if your willful negligence or willful act caused it. Military pay chart The same is true if the willful act or willful negligence of someone acting for you caused the accident. Military pay chart Progressive deterioration (explained below). Military pay chart However, see Special Procedure for Damage From Corrosive Drywall , later. Military pay chart Family pet. Military pay chart   Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed earlier under Casualty are met. Military pay chart Example. Military pay chart Your antique oriental rug was damaged by your new puppy before it was housebroken. Military pay chart Because the damage was not unexpected and unusual, the loss is not deductible as a casualty loss. Military pay chart Progressive deterioration. Military pay chart   Loss of property due to progressive deterioration is not deductible as a casualty loss. Military pay chart This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Military pay chart The following are examples of damage due to progressive deterioration. Military pay chart The steady weakening of a building due to normal wind and weather conditions. Military pay chart The deterioration and damage to a water heater that bursts. Military pay chart However, the rust and water damage to rugs and drapes caused by the bursting of a water heater does qualify as a casualty. Military pay chart Most losses of property caused by droughts. Military pay chart To be deductible, a drought-related loss generally must be incurred in a trade or business or in a transaction entered into for profit. Military pay chart Termite or moth damage. Military pay chart The damage or destruction of trees, shrubs, or other plants by a fungus, disease, insects, worms, or similar pests. Military pay chart However, a sudden destruction due to an unexpected or unusual infestation of beetles or other insects may result in a casualty loss. Military pay chart Special Procedure for Damage From Corrosive Drywall Under a special procedure, you can deduct the amounts you paid to repair damage to your home and household appliances due to corrosive drywall. Military pay chart Under this procedure, you treat the amounts paid for repairs as a casualty loss in the year of payment. Military pay chart For example, amounts you paid for repairs in 2013 are deductible on your 2013 tax return and amounts you paid for repairs in 2012 are deductible on your 2012 tax return. Military pay chart Note. Military pay chart If you paid for any repairs before 2013 and you choose to follow this special procedure, you can amend your return for the earlier year by filing Form 1040X, Amended U. Military pay chart S. Military pay chart Individual Income Tax Return, and attaching a completed Form 4684 for the appropriate year. Military pay chart Form 4684 for the appropriate year can be found at IRS. Military pay chart gov. Military pay chart Generally, Form 1040X must be filed within 3 years after the date the original return was filed or within 2 years after the date the tax was paid, whichever is later. Military pay chart Corrosive drywall. Military pay chart   For purposes of this special procedure, “corrosive drywall” means drywall that is identified as problem drywall under the two-step identification method published by the Consumer Product Safety Commission (CPSC) and the Department of Housing and Urban Development (HUD) in their interim guidance dated January 28, 2010, as revised by the CPSC and HUD. Military pay chart The revised identification guidance and remediation guidelines are available at www. Military pay chart cpsc. Military pay chart gov/Safety-Education/Safety-Education-Centers/Drywall. Military pay chart Special instructions for completing Form 4684. Military pay chart   If you choose to follow this special procedure, complete Form 4684, Section A, according to the instructions below. Military pay chart The IRS will not challenge your treatment of damage resulting from corrosive drywall as a casualty loss if you determine and report the loss as explained below. Military pay chart Top margin of Form 4684. Military pay chart   Enter “Revenue Procedure 2010-36”. Military pay chart Line 1. Military pay chart   Enter the information required by the line 1 instructions. Military pay chart Line 2. Military pay chart   Skip this line. Military pay chart Line 3. Military pay chart   Enter the amount of insurance or other reimbursements you received (including through litigation). Military pay chart If none, enter -0-. Military pay chart Lines 4–7. Military pay chart   Skip these lines. Military pay chart Line 8. Military pay chart   Enter the amount you paid to repair the damage to your home and household appliances due to corrosive drywall. Military pay chart Enter only the amounts you paid to restore your home to the condition existing immediately before the damage. Military pay chart Do not enter any amounts you paid for improvements or additions that increased the value of your home above its pre-loss value. Military pay chart If you replaced a household appliance instead of repairing it, enter the lesser of: The current cost to replace the original appliance, or The basis of the original appliance (generally its cost). Military pay chart Line 9. Military pay chart   If line 8 is more than line 3, do one of the following. Military pay chart If you have a pending claim for reimbursement (or you intend to pursue reimbursement), enter 75% of the difference between lines 3 and 8. Military pay chart If item (1) does not apply to you, enter the full amount of the difference between lines 3 and 8. Military pay chart If line 8 is less than or equal to line 3, you cannot claim a casualty loss deduction using this special procedure. Military pay chart    If you have a pending claim for reimbursement (or you intend to pursue reimbursement), you may have income or an additional deduction in a later tax year depending on the actual amount of reimbursement received. Military pay chart See Reimbursement Received After Deducting Loss, later. Military pay chart Lines 10–18. Military pay chart   Complete these lines according to the Instructions for Form 4684. Military pay chart Choosing not to follow this special procedure. Military pay chart   If you choose not to follow this special procedure, you are subject to all of the provisions that apply to the deductibility of casualty losses, and you must complete lines 1–9 according to the Instructions for Form 4684. Military pay chart This means, for example, that you must establish that the damage, destruction, or loss of property resulted from an identifiable event as defined earlier under Casualty . Military pay chart Furthermore, you must have proof that shows the following. Military pay chart The loss is properly deductible in the tax year you claimed it and not in some other year. Military pay chart See When To Report Gains and Losses , later. Military pay chart The amount of the claimed loss. Military pay chart See Proof of Loss , later. Military pay chart No claim for reimbursement of any portion of the loss exists for which there is a reasonable prospect of recovery. Military pay chart See When To Report Gains and Losses , later. Military pay chart Theft A theft is the taking and removing of money or property with the intent to deprive the owner of it. Military pay chart 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. Military pay chart You do not need to show a conviction for theft. Military pay chart Theft includes the taking of money or property by the following means. Military pay chart Blackmail. Military pay chart Burglary. Military pay chart Embezzlement. Military pay chart Extortion. Military pay chart Kidnapping for ransom. Military pay chart Larceny. Military pay chart Robbery. Military pay chart The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Military pay chart Decline in market value of stock. Military pay chart   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. Military pay chart 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. Military pay chart You report a capital loss on Schedule D (Form 1040). Military pay chart For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Military pay chart Mislaid or lost property. Military pay chart    The simple disappearance of money or property is not a theft. Military pay chart 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. Military pay chart Sudden, unexpected, and unusual events were defined earlier under Casualty . Military pay chart Example. Military pay chart A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Military pay chart The diamond falls from the ring and is never found. Military pay chart The loss of the diamond is a casualty. Military pay chart Losses from Ponzi-type investment schemes. Military pay chart   The IRS has issued the following guidance to assist taxpayers who are victims of losses from Ponzi-type investment schemes: Revenue Ruling 2009-9, 2009-14 I. Military pay chart R. Military pay chart B. Military pay chart 735 (available at www. Military pay chart irs. Military pay chart gov/irb/2009-14_IRB/ar07. Military pay chart html). Military pay chart Revenue Procedure 2009-20, 2009-14 I. Military pay chart R. Military pay chart B. Military pay chart 749 (available at www. Military pay chart irs. Military pay chart gov/irb/2009-14_IRB/ar11. Military pay chart html). Military pay chart Revenue Procedure 2011-58, 2011-50 I. Military pay chart R. Military pay chart B. Military pay chart 847 (available at www. Military pay chart irs. Military pay chart gov/irb/2011-50_IRB/ar11. Military pay chart html). Military pay chart If you qualify to use Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58, and you choose to follow the procedures in the guidance, first fill out Section C of Form 4684 to determine the amount to enter on Section B, line 28. Military pay chart Skip lines 19 to 27, but you must fill out Section B, lines 29 to 39, as appropriate. Military pay chart Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. Military pay chart You do not need to complete Appendix A. Military pay chart For more information, see the above revenue ruling and revenue procedures, and the Instructions for Form 4684. Military pay chart   If you choose not to use the procedures in Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58, you may claim your theft loss by filling out Section B, lines 19 to 39, as appropriate. Military pay chart Loss on Deposits A loss on deposits can occur when a bank, credit union, or other financial institution becomes insolvent or bankrupt. Military pay chart If you incurred this type of loss, you can choose one of the following ways to deduct the loss. Military pay chart As a casualty loss. Military pay chart As an ordinary loss. Military pay chart As a nonbusiness bad debt. Military pay chart Casualty loss or ordinary loss. Military pay chart   You can choose to deduct a loss on deposits as a casualty loss or as an ordinary loss for any year in which you can reasonably estimate how much of your deposits you have lost in an insolvent or bankrupt financial institution. Military pay chart The choice generally is made on the return you file for that year and applies to all your losses on deposits for the year in that particular financial institution. Military pay chart If you treat the loss as a casualty or ordinary loss, you cannot treat the same amount of the loss as a nonbusiness bad debt when it actually becomes worthless. Military pay chart However, you can take a nonbusiness bad debt deduction for any amount of loss that is more than the estimated amount you deducted as a casualty or ordinary loss. Military pay chart Once you make the choice, you cannot change it without permission from the Internal Revenue Service. Military pay chart   If you claim an ordinary loss, report it as a miscellaneous itemized deduction on Schedule A (Form 1040), line 23. Military pay chart The maximum amount you can claim is $20,000 ($10,000 if you are married filing separately) reduced by any expected state insurance proceeds. Military pay chart Your loss is subject to the 2%-of-adjusted-gross-income limit. Military pay chart You cannot choose to claim an ordinary loss if any part of the deposit is federally insured. Military pay chart Nonbusiness bad debt. Military pay chart   If you do not choose to deduct the loss as a casualty loss or as an ordinary loss, you must wait until the year the actual loss is determined and deduct the loss as a nonbusiness bad debt in that year. Military pay chart How to report. Military pay chart   The kind of deduction you choose for your loss on deposits determines how you report your loss. Military pay chart See Table 1. Military pay chart More information. Military pay chart   For more information, see Special Treatment for Losses on Deposits in Insolvent or Bankrupt Financial Institutions in the Instructions for Form 4684. Military pay chart Deducted loss recovered. Military pay chart   If you recover an amount you deducted as a loss in an earlier year, you may have to include the amount recovered in your income for the year of recovery. Military pay chart If any part of the original deduction did not reduce your tax in the earlier year, you do not have to include that part of the recovery in your income. Military pay chart For more information, see Recoveries in Publication 525. Military pay chart Proof of Loss To deduct a casualty or theft loss, you must be able to show that there was a casualty or theft. Military pay chart You also must be able to support the amount you take as a deduction. Military pay chart Casualty loss proof. Military pay chart   For a casualty loss, you should be able to show all of the following. Military pay chart The type of casualty (car accident, fire, storm, etc. Military pay chart ) and when it occurred. Military pay chart That the loss was a direct result of the casualty. Military pay chart 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. Military pay chart Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Military pay chart Theft loss proof. Military pay chart   For a theft loss, you should be able to show all of the following. Military pay chart When you discovered that your property was missing. Military pay chart That your property was stolen. Military pay chart That you were the owner of the property. Military pay chart Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Military pay chart    It is important that you have records that will prove your deduction. Military pay chart If you do not have the actual records to support your deduction, you can use other satisfactory evidence to support it. Military pay chart Figuring a Loss To determine your deduction for a casualty or theft loss, you must first figure your loss. Military pay chart Table 1. Military pay chart Reporting Loss on Deposits IF you choose to report the loss as a(n). Military pay chart . Military pay chart . Military pay chart   THEN report it on. Military pay chart . Military pay chart . Military pay chart casualty loss   Form 4684 and Schedule A  (Form 1040). Military pay chart ordinary loss   Schedule A (Form 1040). Military pay chart nonbusiness bad debt   Form 8949 and Schedule D (Form 1040). Military pay chart Amount of loss. Military pay chart   Figure the amount of your loss using the following steps. Military pay chart Determine your adjusted basis in the property before the casualty or theft. Military pay chart Determine the decrease in fair market value (FMV) of the property as a result of the casualty or theft. Military pay chart From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you received or expect to receive. Military pay chart For personal-use property and property used in performing services as an employee, apply the deduction limits, discussed later, to determine the amount of your deductible loss. Military pay chart Gain from reimbursement. Military pay chart   If your reimbursement is more than your adjusted basis in the property, you have a gain. Military pay chart This is true even if the decrease in the FMV of the property is smaller than your adjusted basis. Military pay chart If you have a gain, you may have to pay tax on it, or you may be able to postpone reporting the gain. Military pay chart See Figuring a Gain , later. Military pay chart Business or income-producing property. Military pay chart   If you have business or income-producing property, such as rental property, and it is stolen or completely destroyed, the decrease in FMV is not considered. Military pay chart 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   Loss of inventory. Military pay chart   There are two ways you can deduct a casualty or theft loss of inventory, including items you hold for sale to customers. Military pay chart   One way is to deduct the loss through the increase in the cost of goods sold by properly reporting your opening and closing inventories. Military pay chart Do not claim this loss again as a casualty or theft loss. Military pay chart If you take the loss through the increase in the cost of goods sold, include any insurance or other reimbursement you receive for the loss in gross income. Military pay chart   The other way is to deduct the loss separately. Military pay chart If you deduct it separately, eliminate the affected inventory items from the cost of goods sold by making a downward adjustment to opening inventory or purchases. Military pay chart Reduce the loss by the reimbursement you received. Military pay chart Do not include the reimbursement in gross income. Military pay chart If you do not receive the reimbursement by the end of the year, you may not claim a loss to the extent you have a reasonable prospect of recovery. Military pay chart Leased property. Military pay chart   If you are liable for casualty damage to property you lease, your loss is the amount you must pay to repair the property minus any insurance or other reimbursement you receive or expect to receive. Military pay chart Separate computations. Military pay chart   Generally, if a single casualty or theft involves more than one item of property, you must figure the loss on each item separately. Military pay chart Then combine the losses to determine the total loss from that casualty or theft. Military pay chart Exception for personal-use real property. Military pay chart   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. Military pay chart Figure the loss using the smaller of the following. Military pay chart The decrease in FMV of the entire property. Military pay chart The adjusted basis of the entire property. Military pay chart   See Real property under Figuring the Deduction, later. Military pay chart Decrease in Fair Market Value Fair market value (FMV) is the price for which you could sell your property to a willing buyer when neither of you has to sell or buy and both of you know all the relevant facts. Military pay chart The decrease in FMV used to figure the amount of a casualty or theft loss is the difference between the property's fair market value immediately before and immediately after the casualty or theft. Military pay chart FMV of stolen property. Military pay chart   The FMV of property immediately after a theft is considered to be zero because you no longer have the property. Military pay chart Example. Military pay chart Several years ago, you purchased silver dollars at face value for $150. Military pay chart This is your adjusted basis in the property. Military pay chart Your silver dollars were stolen this year. Military pay chart The FMV of the coins was $1,000 just before they were stolen, and insurance did not cover them. Military pay chart Your theft loss is $150. Military pay chart Recovered stolen property. Military pay chart   Recovered stolen property is your property that was stolen and later returned to you. Military pay chart If you recovered property after you had already taken a theft loss deduction, you must refigure your loss using the smaller of the property's adjusted basis (explained later) or the decrease in FMV from the time just before it was stolen until the time it was recovered. Military pay chart Use this amount to refigure your total loss for the year in which the loss was deducted. Military pay chart   If your refigured loss is less than the loss you deducted, you generally have to report the difference as income in the recovery year. Military pay chart But report the difference only up to the amount of the loss that reduced your tax. Military pay chart For more information on the amount to report, see Recoveries in Publication 525. Military pay chart Figuring Decrease in FMV — Items To Consider To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Military pay chart However, other measures also can be used to establish certain decreases. Military pay chart See Appraisal and Cost of cleaning up or making repairs , next. Military pay chart Appraisal. Military pay chart   An appraisal to determine the difference between the FMV of the property immediately before a casualty or theft and immediately afterwards should be made by a competent appraiser. Military pay chart The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Military pay chart This information is needed to limit any deduction to the actual loss resulting from damage to the property. Military pay chart   Several factors are important in evaluating the accuracy of an appraisal, including the following. Military pay chart The appraiser's familiarity with your property before and after the casualty or theft. Military pay chart The appraiser's knowledge of sales of comparable property in the area. Military pay chart The appraiser's knowledge of conditions in the area of the casualty. Military pay chart The appraiser's method of appraisal. Military pay chart You may be able to use an appraisal that you used to get a federal loan (or a federal loan guarantee) as the result of a federally declared disaster to establish the amount of your disaster loss. Military pay chart For more information on disasters, see Disaster Area Losses, later. Military pay chart Cost of cleaning up or making repairs. Military pay chart   The cost of repairing damaged property is not part of a casualty loss. Military pay chart Neither is the cost of cleaning up after a casualty. Military pay chart But you can use the cost of cleaning up or of making repairs after a casualty as a measure of the decrease in FMV if you meet all the following conditions. Military pay chart The repairs are actually made. Military pay chart The repairs are necessary to bring the property back to its condition before the casualty. Military pay chart The amount spent for repairs is not excessive. Military pay chart The repairs take care of the damage only. Military pay chart The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Military pay chart Landscaping. Military pay chart   The cost of restoring landscaping to its original condition after a casualty may indicate the decrease in FMV. Military pay chart You may be able to measure your loss by what you spend on the following. Military pay chart Removing destroyed or damaged trees and shrubs, minus any salvage you receive. Military pay chart Pruning and other measures taken to preserve damaged trees and shrubs. Military pay chart Replanting necessary to restore the property to its approximate value before the casualty. Military pay chart Car value. Military pay chart   Books issued by various automobile organizations that list your car may be useful in figuring the value of your car. Military pay chart You can use the books' retail values and modify them by factors such as the mileage and condition of your car to figure its value. Military pay chart The prices are not official, but they may be useful in determining value and suggesting relative prices for comparison with current sales and offerings in your area. Military pay chart If your car is not listed in the books, determine its value from other sources. Military pay chart A dealer's offer for your car as a trade-in on a new car is not usually a measure of its true value. Military pay chart Figuring Decrease in FMV — Items Not To Consider You generally should not consider the following items when attempting to establish the decrease in FMV of your property. Military pay chart Cost of protection. Military pay chart   The cost of protecting your property against a casualty or theft is not part of a casualty or theft loss. Military pay chart The amount you spend on insurance or to board up your house against a storm is not part of your loss. Military pay chart If the property is business property, these expenses are deductible as business expenses. Military pay chart   If you make permanent improvements to your property to protect it against a casualty or theft, add the cost of these improvements to your basis in the property. Military pay chart An example would be the cost of a dike to prevent flooding. Military pay chart Exception. Military pay chart   You cannot increase your basis in the property by, or deduct as a business expense, any expenditures you made with respect to qualified disaster mitigation payments (discussed later under Disaster Area Losses ). Military pay chart Related expenses. Military pay chart   The incidental expenses due to a casualty or theft, such as expenses for the treatment of personal injuries, for temporary housing, or for a rental car, are not part of your casualty or theft loss. Military pay chart However, they may be deductible as business expenses if the damaged or stolen property is business property. Military pay chart Replacement cost. Military pay chart   The cost of replacing stolen or destroyed property is not part of a casualty or theft loss. Military pay chart Example. Military pay chart You bought a new chair 4 years ago for $300. Military pay chart In April, a fire destroyed the chair. Military pay chart You estimate that it would cost $500 to replace it. Military pay chart If you had sold the chair before the fire, you estimate that you could have received only $100 for it because it was 4 years old. Military pay chart The chair was not insured. Military pay chart Your loss is $100, the FMV of the chair before the fire. Military pay chart It is not $500, the replacement cost. Military pay chart Sentimental value. Military pay chart   Do not consider sentimental value when determining your loss. Military pay chart If a family portrait, heirloom, or keepsake is damaged, destroyed, or stolen, you must base your loss on its FMV, as limited by your adjusted basis in the property. Military pay chart Decline in market value of property in or near casualty area. Military pay chart   A decrease in the value of your property because it is in or near an area that suffered a casualty, or that might again suffer a casualty, is not to be taken into consideration. Military pay chart You have a loss only for actual casualty damage to your property. Military pay chart However, if your home is in a federally declared disaster area, see Disaster Area Losses , later. Military pay chart Costs of photographs and appraisals. Military pay chart   Photographs taken after a casualty will be helpful in establishing the condition and value of the property after it was damaged. Military pay chart Photographs showing the condition of the property after it was repaired, restored, or replaced may also be helpful. Military pay chart   Appraisals are used to figure the decrease in FMV because of a casualty or theft. Military pay chart See Appraisal , earlier, under Figuring Decrease in FMV — Items To Consider, for information about appraisals. Military pay chart   The costs of photographs and appraisals used as evidence of the value and condition of property damaged as a result of a casualty are not a part of the loss. Military pay chart They are expenses in determining your tax liability. Military pay chart You can claim these costs as a miscellaneous itemized deduction subject to the 2%-of-adjusted-gross-income limit on Schedule A (Form 1040). Military pay chart Adjusted Basis The measure of your investment in the property you own is its basis. Military pay chart For property you buy, your basis is usually its cost to you. Military pay chart For property you acquire in some other way, such as inheriting it, receiving it as a gift, or getting it in a nontaxable exchange, you must figure your basis in another way, as explained in Publication 551. Military pay chart If you inherited the property from someone who died in 2010 and the executor of the decedent's estate made the election to file Form 8939, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. Military pay chart Adjustments to basis. Military pay chart    While you own the property, various events may take place that change your basis. Military pay chart Some events, such as additions or permanent improvements to the property, increase basis. Military pay chart Others, such as earlier casualty losses and depreciation deductions, decrease basis. Military pay chart When you add the increases to the basis and subtract the decreases from the basis, the result is your adjusted basis. Military pay chart See Publication 551 for more information on figuring the basis of your property. Military pay chart Insurance and Other Reimbursements If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Military pay chart You do not have a casualty or theft loss to the extent you are reimbursed. Military pay chart If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Military pay chart You must reduce your loss even if you do not receive payment until a later tax year. Military pay chart See Reimbursement Received After Deducting Loss , later. Military pay chart Failure to file a claim for reimbursement. Military pay chart   If your property is covered by insurance, you must file a timely insurance claim for reimbursement of your loss. Military pay chart Otherwise, you cannot deduct this loss as a casualty or theft. Military pay chart The portion of the loss usually not covered by insurance (for example, a deductible) is not subject to this rule. Military pay chart Example. Military pay chart You have a car insurance policy with a $1,000 deductible. Military pay chart Because your insurance did not cover the first $1,000 of an auto collision, the $1,000 would be deductible (subject to the $100 and 10% rules, discussed later). Military pay chart This is true, even if you do not file an insurance claim, because your insurance policy would never have reimbursed you for the deductible. Military pay chart Types of Reimbursements The most common type of reimbursement is an insurance payment for your stolen or damaged property. Military pay chart Other types of reimbursements are discussed next. Military pay chart Also see the Instructions for Form 4684. Military pay chart Employer's emergency disaster fund. Military pay chart   If you receive money from your employer's emergency disaster fund and you must use that money to rehabilitate or replace property on which you are claiming a casualty loss deduction, you must take that money into consideration in computing the casualty loss deduction. Military pay chart Take into consideration only the amount you used to replace your destroyed or damaged property. Military pay chart Example. Military pay chart Your home was extensively damaged by a tornado. Military pay chart Your loss after reimbursement from your insurance company was $10,000. Military pay chart Your employer set up a disaster relief fund for its employees. Military pay chart Employees receiving money from the fund had to use it to rehabilitate or replace their damaged or destroyed property. Military pay chart You received $4,000 from the fund and spent the entire amount on repairs to your home. Military pay chart In figuring your casualty loss, you must reduce your unreimbursed loss ($10,000) by the $4,000 you received from your employer's fund. Military pay chart Your casualty loss before applying the deduction limits (discussed later) is $6,000. Military pay chart Cash gifts. Military pay chart   If you receive excludable cash gifts as a disaster victim and there are no limits on how you can use the money, you do not reduce your casualty loss by these excludable cash gifts. Military pay chart This applies even if you use the money to pay for repairs to property damaged in the disaster. Military pay chart Example. Military pay chart Your home was damaged by a hurricane. Military pay chart Relatives and neighbors made cash gifts to you that were excludable from your income. Military pay chart You used part of the cash gifts to pay for repairs to your home. Military pay chart There were no limits or restrictions on how you could use the cash gifts. Military pay chart It was an excludable gift, so the money you received and used to pay for repairs to your home does not reduce your casualty loss on the damaged home. Military pay chart Insurance payments for living expenses. Military pay chart   You do not reduce your casualty loss by insurance payments you receive to cover living expenses in either of the following situations. Military pay chart You lose the use of your main home because of a casualty. Military pay chart Government authorities do not allow you access to your main home because of a casualty or threat of one. Military pay chart Inclusion in income. Military pay chart   If these insurance payments are more than the temporary increase in your living expenses, you must include the excess in your income. Military pay chart Report this amount on Form 1040, line 21. Military pay chart However, if the casualty occurs in a federally declared disaster area, none of the insurance payments are taxable. Military pay chart See Qualified disaster relief payments , later, under Disaster Area Losses. Military pay chart   A temporary increase in your living expenses is the difference between the actual living expenses you and your family incurred during the period you could not use your home and your normal living expenses for that period. Military pay chart Actual living expenses are the reasonable and necessary expenses incurred because of the loss of your main home. Military pay chart Generally, these expenses include the amounts you pay for the following. Military pay chart Renting suitable housing. Military pay chart Transportation. Military pay chart Food. Military pay chart Utilities. Military pay chart Miscellaneous services. Military pay chart Normal living expenses consist of these same expenses that you would have incurred but did not because of the casualty or the threat of one. Military pay chart Example. Military pay chart As a result of a fire, you vacated your apartment for a month and moved to a motel. Military pay chart You normally pay $525 a month for rent. Military pay chart None was charged for the month the apartment was vacated. Military pay chart Your motel rent for this month was $1,200. Military pay chart You normally pay $200 a month for food. Military pay chart Your food expenses for the month you lived in the motel were $400. Military pay chart You received $1,100 from your insurance company to cover your living expenses. Military pay chart You determine the payment you must include in income as follows. Military pay chart 1. Military pay chart Insurance payment for living expenses $1,100 2. Military pay chart Actual expenses during the month you are unable to use your home because of the fire $1,600   3. Military pay chart Normal living expenses 725   4. Military pay chart Temporary increase in living expenses: Subtract line 3  from line 2 875 5. Military pay chart Amount of payment includible in income: Subtract line 4 from line 1 $ 225 Tax year of inclusion. Military pay chart   You include the taxable part of the insurance payment in income for the year you regain the use of your main home or, if later, for the year you receive the taxable part of the insurance payment. Military pay chart Example. Military pay chart Your main home was destroyed by a tornado in August 2011. Military pay chart You regained use of your home in November 2012. Military pay chart The insurance payments you received in 2011 and 2012 were $1,500 more than the temporary increase in your living expenses during those years. Military pay chart You include this amount in income on your 2012 Form 1040. Military pay chart If, in 2013, you receive further payments to cover the living expenses you had in 2011 and 2012, you must include those payments in income on your 2013 Form 1040. Military pay chart Disaster relief. Military pay chart   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. Military pay chart Table 2. Military pay chart Deduction Limit Rules for Personal-Use and Employee Property       $100 Rule 10% Rule 2% Rule General Application You must reduce each casualty or theft loss by $100 when figuring your deduction. Military pay chart Apply this rule to personal-use property after you have figured the amount of your loss. Military pay chart You must reduce your total casualty or theft loss by 10% of your adjusted gross income. Military pay chart Apply this rule to personal-use property after you reduce each loss by $100 (the $100 rule). Military pay chart You must reduce your total casualty or theft loss by 2% of your adjusted gross income. Military pay chart Apply this rule to property you used in performing services as an employee after you have figured the amount of your loss and added it to your job expenses and most other miscellaneous itemized deductions. Military pay chart Single Event Apply this rule only once, even if many pieces of property are affected. Military pay chart Apply this rule only once, even if many pieces of property are affected. Military pay chart Apply this rule only once, even if many pieces of property are affected. Military pay chart More Than One Event Apply to the loss from each event. Military pay chart Apply to the total of all your losses from all events. Military pay chart Apply to the total of all your losses from all events. Military pay chart More Than One Person— With Loss From the   Same Event  (other than a married couple  filing jointly) Apply separately to each person. Military pay chart Apply separately to each person. Military pay chart Apply separately to each person. Military pay chart Married Couple—  With Loss From the  Same Event Filing Joint Return Apply as if you were one person. Military pay chart Apply as if you were one person. Military pay chart Apply as if you were one person. Military pay chart Filing Separate Return Apply separately to each spouse. Military pay chart Apply separately to each spouse. Military pay chart Apply separately to each spouse. Military pay chart More Than One Owner (other than a married couple filing jointly) Apply separately to each owner of jointly owned property. Military pay chart Apply separately to each owner of jointly owned property. Military pay chart Apply separately to each owner of jointly owned property. Military pay chart    Qualified disaster relief payments you receive for expenses you incurred as a result of a federally declared disaster, are not taxable income to you. Military pay chart For more information, see Qualified disaster relief payments under Disaster Area Losses, later. Military pay chart   Disaster unemployment assistance payments are unemployment benefits that are taxable. Military pay chart   Generally, disaster relief grants received under the Robert T. Military pay chart Stafford Disaster Relief and Emergency Assistance Act are not included in your income. Military pay chart See Federal disaster relief grants , later, under Disaster Area Losses. Military pay chart Loan proceeds. Military pay chart   Do not reduce your casualty loss by loan proceeds you use to rehabilitate or replace property on which you are claiming a casualty loss deduction. Military pay chart If you have a federal loan that is canceled (forgiven), see Federal loan canceled , later, under Disaster Area Losses. Military pay chart Reimbursement Received After Deducting Loss If you figured your casualty or theft loss using the amount of your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement. Military pay chart This section explains the adjustment you may have to make. Military pay chart Actual reimbursement less than expected. Military pay chart   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. Military pay chart Example. Military pay chart Your personal car had a FMV of $2,000 when it was destroyed in a collision with another car in 2012. Military pay chart The accident was due to the negligence of the other driver. Military pay chart At the end of 2012, there was a reasonable prospect that the owner of the other car would reimburse you in full. Military pay chart You did not have a deductible loss in 2012. Military pay chart In January 2013, the court awards you a judgment of $2,000. Military pay chart However, in July it becomes apparent that you will be unable to collect any amount from the other driver. Military pay chart Since this is your only casualty or theft loss, you can deduct the loss in 2013 that is figured by applying the Deduction Limits (discussed later). Military pay chart Actual reimbursement more than expected. Military pay chart   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. Military pay chart However, if any part of the original deduction did not reduce your tax for the earlier year, do not include that part of the reimbursement in your income. Military pay chart You do not refigure your tax for the year you claimed the deduction. Military pay chart See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. Military pay chart Example. Military pay chart In 2012, a hurricane destroyed your motorboat. Military pay chart Your loss was $3,000, and you estimated that your insurance would cover $2,500 of it. Military pay chart You did not itemize deductions on your 2012 return, so you could not deduct the loss. Military pay chart When the insurance company reimburses you for the loss, you do not report any of the reimbursement as income. Military pay chart This is true even if it is for the full $3,000 because you did not deduct the loss on your 2012 return. Military pay chart The loss did not reduce your tax. Military pay chart    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. Military pay chart If you have already taken a deduction for a loss and you receive the reimbursement in a later year, you may have to include the gain in your income for the later year. Military pay chart Include the gain as ordinary income up to the amount of your deduction that reduced your tax for the earlier year. Military pay chart You may be able to postpone reporting any remaining gain as explained under Postponement of Gain, later. Military pay chart Actual reimbursement same as expected. Military pay chart   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. Military pay chart Example. Military pay chart In December 2013, you had a collision while driving your personal car. Military pay chart Repairs to the car cost $950. Military pay chart You had $100 deductible collision insurance. Military pay chart Your insurance company agreed to reimburse you for the rest of the damage. Military pay chart Because you expected a reimbursement from the insurance company, you did not have a casualty loss deduction in 2013. Military pay chart Due to the $100 rule, you cannot deduct the $100 you paid as the deductible. Military pay chart When you receive the $850 from the insurance company in 2014, do not report it as income. Military pay chart Deduction Limits After you have figured your casualty or theft loss, you must figure how much of the loss you can deduct. Military pay chart The deduction for casualty and theft losses of employee property and personal-use property is limited. Military pay chart A loss on employee property is subject to the 2% rule, discussed next. Military pay chart With certain exceptions, a loss on property you own for your personal use is subject to the $100 and 10% rules, discussed later. Military pay chart The 2%, $100, and 10% rules are also summarized in Table 2 . Military pay chart Losses on business property (other than employee property) and income-producing property are not subject to these rules. Military pay chart However, if your casualty or theft loss involved a home you used for business or rented out, your deductible loss may be limited. Military pay chart See the Instructions for Form 4684, Section B. Military pay chart If the casualty or theft loss involved property used in a passive activity, see Form 8582, Passive Activity Loss Limitations, and its instructions. Military pay chart 2% Rule The casualty and theft loss deduction for employee property, when added to your job expenses and most other miscellaneous itemized deductions on Schedule A (Form 1040) or Form 1040NR, Schedule A, must be reduced by 2% of your adjusted gross income. Military pay chart Employee property is property used in performing services as an employee. Military pay chart $100 Rule After you have figured your casualty or theft loss on personal-use property, as discussed earlier, you must reduce that loss by $100. Military pay chart This reduction applies to each total casualty or theft loss. Military pay chart It does not matter how many pieces of property are involved in an event. Military pay chart Only a single $100 reduction applies. Military pay chart Example. Military pay chart You have $750 deductible collision insurance on your car. Military pay chart The car is damaged in a collision. Military pay chart The insurance company pays you for the damage minus the $750 deductible. Military pay chart The amount of the casualty loss is based solely on the deductible. Military pay chart The casualty loss is $650 ($750 − $100) because the first $100 of a casualty loss on personal-use property is not deductible. Military pay chart Single event. Military pay chart   Generally, events closely related in origin cause a single casualty. Military pay chart It is a single casualty when the damage is from two or more closely related causes, such as wind and flood damage caused by the same storm. Military pay chart A single casualty may also damage two or more pieces of property, such as a hailstorm that damages both your home and your car parked in your driveway. Military pay chart Example 1. Military pay chart A thunderstorm destroyed your pleasure boat. Military pay chart You also lost some boating equipment in the storm. Military pay chart Your loss was $5,000 on the boat and $1,200 on the equipment. Military pay chart Your insurance company reimbursed you $4,500 for the damage to your boat. Military pay chart You had no insurance coverage on the equipment. Military pay chart Your casualty loss is from a single event and the $100 rule applies once. Military pay chart Figure your loss before applying the 10% rule (discussed later) as follows. Military pay chart     Boat Equipment 1. Military pay chart Loss $5,000 $1,200 2. Military pay chart Subtract insurance 4,500 -0- 3. Military pay chart Loss after reimbursement $ 500 $1,200 4. Military pay chart Total loss $1,700 5. Military pay chart Subtract $100 100 6. Military pay chart Loss before 10% rule $1,600 Example 2. Military pay chart Thieves broke into your home in January and stole a ring and a fur coat. Military pay chart You had a loss of $200 on the ring and $700 on the coat. Military pay chart This is a single theft. Military pay chart The $100 rule applies to the total $900 loss. Military pay chart Example 3. Military pay chart In September, hurricane winds blew the roof off your home. Military pay chart Flood waters caused by the hurricane further damaged your home and destroyed your furniture and personal car. Military pay chart This is considered a single casualty. Military pay chart The $100 rule is applied to your total loss from the flood waters and the wind. Military pay chart More than one loss. Military pay chart   If you have more than one casualty or theft loss during your tax year, you must reduce each loss by $100. Military pay chart Example. Military pay chart Your family car was damaged in an accident in January. Military pay chart Your loss after the insurance reimbursement was $75. Military pay chart In February, your car was damaged in another accident. Military pay chart This time your loss after the insurance reimbursement was $90. Military pay chart Apply the $100 rule to each separate casualty loss. Military pay chart Since neither accident resulted in a loss of over $100, you are not entitled to any deduction for these accidents. Military pay chart More than one person. Military pay chart   If two or more individuals (other than a husband and wife filing a joint return) have losses from the same casualty or theft, the $100 rule applies separately to each individual. Military pay chart Example. Military pay chart A fire damaged your house and also damaged the personal property of your house guest. Military pay chart You must reduce your loss by $100. Military pay chart Your house guest must reduce his or her loss by $100. Military pay chart Married taxpayers. Military pay chart   If you and your spouse file a joint return, you are treated as one individual in applying the $100 rule. Military pay chart It does not matter whether you own the property jointly or separately. Military pay chart   If you and your spouse have a casualty or theft loss and you file separate returns, each of you must reduce your loss by $100. Military pay chart This is true even if you own the property jointly. Military pay chart If one spouse owns the property, only that spouse can figure a loss deduction on a separate return. Military pay chart   If the casualty or theft loss is on property you own as tenants by the entirety, each of you can figure your deduction on only one-half of the loss on separate returns. Military pay chart Neither of you can figure your deduction on the entire loss on a separate return. Military pay chart Each of you must reduce the loss by $100. Military pay chart More than one owner. Military pay chart   If two or more individuals (other than a husband and wife filing a joint return) have a loss on property jointly owned, the $100 rule applies separately to each. Military pay chart For example, if two sisters live together in a home they own jointly and they have a casualty loss on the home, the $100 rule applies separately to each sister. Military pay chart 10% Rule You must reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Military pay chart Apply this rule after you reduce each loss by $100. Military pay chart For more information, see the Form 4684 instructions. Military pay chart If you have both gains and losses from casualties or thefts, see Gains and losses , later in this discussion. Military pay chart Example. Military pay chart In June, you discovered that your house had been burglarized. Military pay chart Your loss after insurance reimbursement was $2,000. Military pay chart Your adjusted gross income for the year you discovered the theft is $29,500. Military pay chart Figure your theft loss as follows. Military pay chart 1. Military pay chart Loss after insurance $2,000 2. Military pay chart Subtract $100 100 3. Military pay chart Loss after $100 rule $1,900 4. Military pay chart Subtract 10% of $29,500 AGI $2,950 5. Military pay chart 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 ($2,950). Military pay chart More than one loss. Military pay chart   If you have more than one casualty or theft loss during your tax year, reduce each loss by any reimbursement and by $100. Military pay chart Then you must reduce the total of all your losses by 10% of your adjusted gross income. Military pay chart Example. Military pay chart In March, you had a car accident that totally destroyed your car. Military pay chart You did not have collision insurance on your car, so you did not receive any insurance reimbursement. Military pay chart Your loss on the car was $1,800. Military pay chart In November, a fire damaged your basement and totally destroyed the furniture, washer, dryer, and other items you had stored there. Military pay chart Your loss on the basement items after reimbursement was $2,100. Military pay chart Your adjusted gross income for the year that the accident and fire occurred is $25,000. Military pay chart You figure your casualty loss deduction as follows. Military pay chart     Car Basement 1. Military pay chart Loss $1,800 $2,100 2. Military pay chart Subtract $100 per incident 100 100 3. Military pay chart Loss after $100 rule $1,700 $2,000 4. Military pay chart Total loss $3,700 5. Military pay chart Subtract 10% of $25,000 AGI 2,500 6. Military pay chart Casualty loss deduction $1,200 Married taxpayers. Military pay chart   If you and your spouse file a joint return, you are treated as one individual in applying the 10% rule. Military pay chart It does not matter if you own the property jointly or separately. Military pay chart   If you file separate returns, the 10% rule applies to each return on which a loss is claimed. Military pay chart More than one owner. Military pay chart   If two or more individuals (other than husband and wife filing a joint return) have a loss on property that is owned jointly, the 10% rule applies separately to each. Military pay chart Gains and losses. Military pay chart   If you have casualty or theft gains as well as losses to personal-use property, you must compare your total gains to your total losses. Military pay chart Do this after you have reduced each loss by any reimbursements and by $100 but before you have reduced the losses by 10% of your adjusted gross income. Military pay chart Casualty or theft gains do not include gains you choose to postpone. Military pay chart See Postponement of Gain, later. Military pay chart Losses more than gains. Military pay chart   If your losses are more than your recognized gains, subtract your gains from your losses and reduce the result by 10% of your adjusted gross income. Military pay chart The rest, if any, is your deductible loss from personal-use property. Military pay chart Example. Military pay chart Your theft loss after reducing it by reimbursements and by $100 is $2,700. Military pay chart Your casualty gain is $700. Military pay chart Your loss is more than your gain, so you must reduce your $2,000 net loss ($2,700 − $700) by 10% of your adjusted gross income. Military pay chart Gains more than losses. Military pay chart   If your recognized gains are more than your losses, subtract your losses from your gains. Military pay chart The difference is treated as a capital gain and must be reported on Schedule D (Form 1040). Military pay chart The 10% rule does not apply to your gains. Military pay chart Example. Military pay chart Your theft loss is $600 after reducing it by reimbursements and by $100. Military pay chart Your casualty gain is $1,600. Military pay chart Because your gain is more than your loss, you must report the $1,000 net gain ($1,600 − $600) on Schedule D (Form 1040). Military pay chart More information. Military pay chart   For information on how to figure recognized gains, see Figuring a Gain , later. Military pay chart Figuring the Deduction Generally, you must figure your loss separately for each item stolen, damaged, or destroyed. Military pay chart However, a special rule applies to real property you own for personal use. Military pay chart Real property. Military pay chart   In figuring a loss to real estate you own for personal use, all improvements (such as buildings and ornamental trees and the land containing the improvements) are considered together. Military pay chart Example 1. Military pay chart In June, a fire destroyed your lakeside cottage, which cost $144,800 (including $14,500 for the land) several years ago. Military pay chart (Your land was not damaged. Military pay chart ) This was your only casualty or theft loss for the year. Military pay chart The FMV of the property immediately before the fire was $180,000 ($145,000 for the cottage and $35,000 for the land). Military pay chart The FMV immediately after the fire was $35,000 (value of the land). Military pay chart You collected $130,000 from the insurance company. Military pay chart Your adjusted gross income for the year the fire occurred is $80,000. Military pay chart Your deduction for the casualty loss is $6,700, figured in the following manner. Military pay chart 1. Military pay chart Adjusted basis of the entire property (cost in this example) $144,800 2. Military pay chart FMV of entire property  before fire $180,000 3. Military pay chart FMV of entire property after fire 35,000 4. Military pay chart Decrease in FMV of entire property (line 2 − line 3) $145,000 5. Military pay chart Loss (smaller of line 1 or line 4) $144,800 6. Military pay chart Subtract insurance 130,000 7. Military pay chart Loss after reimbursement $14,800 8. Military pay chart Subtract $100 100 9. Military pay chart Loss after $100 rule $14,700 10. Military pay chart Subtract 10% of $80,000 AGI 8,000 11. Military pay chart Casualty loss deduction $ 6,700 Example 2. Military pay chart You bought your home a few years ago. Military pay chart You paid $150,000 ($10,000 for the land and $140,000 for the house). Military pay chart You also spent an additional $2,000 for landscaping. Military pay chart This year a fire destroyed your home. Military pay chart The fire also damaged the shrubbery and trees in your yard. Military pay chart The fire was your only casualty or theft loss this year. Military pay chart Competent appraisers valued the property as a whole at $175,000 before the fire, but only $50,000 after the fire. Military pay chart Shortly after the fire, the insurance company paid you $95,000 for the loss. Military pay chart Your adjusted gross income for this year is $70,000. Military pay chart You figure your casualty loss deduction as follows. Military pay chart 1. Military pay chart Adjusted basis of the entire property (cost of land, building, and landscaping) $152,000 2. Military pay chart FMV of entire property  before fire $175,000 3. Military pay chart FMV of entire property after fire 50,000 4. Military pay chart Decrease in FMV of entire property (line 2 − line 3) $125,000 5. Military pay chart Loss (smaller of line 1 or line 4) $125,000 6. Military pay chart Subtract insurance 95,000 7. Military pay chart Loss after reimbursement $30,000 8. Military pay chart Subtract $100 100 9. Military pay chart Loss after $100 rule $29,900 10. Military pay chart Subtract 10% of $70,000 AGI 7,000 11. Military pay chart Casualty loss deduction $ 22,900 Personal property. Military pay chart   Personal property is any property that is not real property. Military pay chart If your personal property is stolen or is damaged or destroyed by a casualty, you must figure your loss separately for each item of property. Military pay chart Then combine these separate losses to figure the total loss. Military pay chart Reduce the total loss by $100 and 10% of your adjusted gross income to figure the loss deduction. Military pay chart Example 1. Military pay chart In August, a storm destroyed your pleasure boat, which cost $18,500. Military pay chart This was your only casualty or theft loss for the year. Military pay chart Its FMV immediately before the storm was $17,000. Military pay chart You had no insurance, but were able to salvage the motor of the boat and sell it for $200. Military pay chart Your adjusted gross income for the year the casualty occurred is $70,000. Military pay chart Although the motor was sold separately, it is part of the boat and not a separate item of property. Military pay chart You figure your casualty loss deduction as follows. Military pay chart 1. Military pay chart Adjusted basis (cost in this example) $18,500 2. Military pay chart FMV before storm $17,000 3. Military pay chart FMV after storm 200 4. Military pay chart Decrease in FMV  (line 2 − line 3) $16,800 5. Military pay chart Loss (smaller of line 1 or line 4) $16,800 6. Military pay chart Subtract insurance -0- 7. Military pay chart Loss after reimbursement $16,800 8. Military pay chart Subtract $100 100 9. Military pay chart Loss after $100 rule $16,700 10. Military pay chart Subtract 10% of $70,000 AGI 7,000 11. Military pay chart Casualty loss deduction $ 9,700 Example 2. Military pay chart In June, you were involved in an auto accident that totally destroyed your personal car and your antique pocket watch. Military pay chart You had bought the car for $30,000. Military pay chart The FMV of the car just before the accident was $17,500. Military pay chart Its FMV just after the accident was $180 (scrap value). Military pay chart Your insurance company reimbursed you $16,000. Military pay chart Your watch was not insured. Military pay chart You had purchased it for $250. Military pay chart Its FMV just before the accident was $500. Military pay chart Your adjusted gross income for the year the accident occurred is $97,000. Military pay chart Your casualty loss deduction is zero, figured as follows. Military pay chart     Car Watch 1. Military pay chart Adjusted basis (cost) $30,000 $250 2. Military pay chart FMV before accident $17,500 $500 3. Military pay chart FMV after accident 180 -0- 4. Military pay chart Decrease in FMV (line 2 − line 3) $17,320 $500 5. Military pay chart Loss (smaller of line 1 or line 4) $17,320 $250 6. Military pay chart Subtract insurance 16,000 -0- 7. Military pay chart Loss after reimbursement $1,320 $250 8. Military pay chart Total loss $1,570 9. Military pay chart Subtract $100 100 10. Military pay chart Loss after $100 rule $1,470 11. Military pay chart Subtract 10% of $97,000 AGI 9,700 12. Military pay chart Casualty loss deduction $ -0- Both real and personal properties. Military pay chart   When a casualty involves both real and personal properties, you must figure the loss separately for each type of property. Military pay chart However, you apply a single $100 reduction to the total loss. Military pay chart Then, you apply the 10% rule to figure the casualty loss deduction. Military pay chart Example. Military pay chart In July, a hurricane damaged your home, which cost you $164,000 including land. Military pay chart The FMV of the property (both building and land) immediately before the storm was $170,000 and its FMV immediately after the storm was $100,000. Military pay chart Your household furnishings were also damaged. Military pay chart You separately figured the loss on each damaged household item and arrived at a total loss of $600. Military pay chart You collected $50,000 from the insurance company for the damage to your home, but your household furnishings were not insured. Military pay chart Your adjusted gross income for the year the hurricane occurred is $65,000. Military pay chart You figure your casualty loss deduction from the hurricane in the following manner. Military pay chart 1. Military pay chart Adjusted basis of real property (cost in this example) $164,000 2. Military pay chart FMV of real property before hurricane $170,000 3. Military pay chart FMV of real property after hurricane 100,000 4. Military pay chart Decrease in FMV of real property (line 2 − line 3) $70,000 5. Military pay chart Loss on real property (smaller of line 1 or line 4) $70,000 6. Military pay chart Subtract insurance 50,000 7. Military pay chart Loss on real property after reimbursement $20,000 8. Military pay chart Loss on furnishings $600 9. Military pay chart Subtract insurance -0- 10. Military pay chart Loss on furnishings after reimbursement $600 11. Military pay chart Total loss (line 7 plus line 10) $20,600 12. Military pay chart Subtract $100 100 13. Military pay chart Loss after $100 rule $20,500 14. Military pay chart Subtract 10% of $65,000 AGI 6,500 15. Military pay chart Casualty loss deduction $14,000 Property used partly for business and partly for personal purposes. Military pay chart   When property is used partly for personal purposes and partly for business or income-producing purposes, the casualty or theft loss deduction must be figured separately for the personal-use portion and for the business or income-producing portion. Military pay chart You must figure each loss separately because the losses attributed to these two uses are figured in two different ways. Military pay chart When figuring each loss, allocate the total cost or basis, the FMV before and after the casualty or theft loss, and the insurance or other reimbursement between the business and personal use of the property. Military pay chart The $100 rule and the 10% rule apply only to the casualty or theft loss on the personal-use portion of the property. Military pay chart Example. Military pay chart You own a building that you constructed on leased land. Military pay chart You use half of the building for your business and you live in the other half. Military pay chart The cost of the building was $400,000. Military pay chart You made no further improvements or additions to it. Military pay chart A flood in March damaged the entire building. Military pay chart The FMV of the building was $380,000 immediately before the flood and $320,000 afterwards. Military pay chart Your insurance company reimbursed you $40,000 for the flood damage. Military pay chart Depreciation on the business part of the building before the flood totaled $24,000. Military pay chart Your adjusted gross income for the year the flood occurred is $125,000. Military pay chart You have a deductible business casualty loss of $10,000. Military pay chart You do not have a deductible personal casualty loss because of the 10% rule. Military pay chart You figure your loss as follows. Military pay chart     Business   Personal     Part   Part 1. Military pay chart Cost (total $400,000) $200,000   $200,000 2. Military pay chart Subtract depreciation 24,000   -0- 3. Military pay chart Adjusted basis $176,000   $200,000 4. Military pay chart FMV before flood (total $380,000) $190,000   $190,000 5. Military pay chart FMV after flood (total $320,000) 160,000   160,000 6. Military pay chart Decrease in FMV  (line 4 − line 5) $30,000   $30,000 7. Military pay chart Loss (smaller of line 3 or line 6) $30,000   $30,000 8. Military pay chart Subtract insurance 20,000   20,000 9. Military pay chart Loss after reimbursement $10,000   $10,000 10. Military pay chart Subtract $100 on personal-use property -0-   100 11. Military pay chart Loss after $100 rule $10,000   $9,900 12. Military pay chart Subtract 10% of $125,000 AGI on personal-use property -0-   12,500 13. Military pay chart Deductible business loss $10,000     14. Military pay chart Deductible personal loss $-0- Figuring a Gain 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. Military pay chart Your gain is figured as follows. Military pay chart The amount you receive (discussed next), minus Your adjusted basis in the property at the time of the casualty or theft. Military pay chart See Adjusted Basis , earlier, for information on adjusted basis. Military pay chart 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. Military pay chart Amount you receive. Military pay chart   The amount you receive includes any money plus the value of any property you receive minus any expenses you have in obtaining reimbursement. Military pay chart It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. Military pay chart Example. Military pay chart A hurricane destroyed your personal residence and the insurance company awarded you $145,000. Military pay chart You received $140,000 in cash. Military pay chart The remaining $5,000 was paid directly to the holder of a mortgage on the property. Military pay chart The amount you received includes the $5,000 reimbursement paid on the mortgage. Military pay chart Main home destroyed. Military pay chart   If you have a gain because your main home was destroyed, you generally can exclude the gain from your income as if you had sold or exchanged your home. Military pay chart You may be able to exclude up to $250,000 of the gain (up to $500,000 if married filing jointly). Military pay chart To exclude a gain, you generally must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date it was destroyed. Military pay chart For information on this exclusion, see Publication 523. Military pay chart 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. Military pay chart See Postponement of Gain , later. Military pay chart Reporting a gain. Military pay chart   You generally must report your gain as income in the year you receive the reimbursement. Military pay chart However, you do not have to report your gain if you meet certain requirements and choose to postpone reporting the gain according to the rules explained under Postponement of Gain, next. Military pay chart   For information on how to report a gain, see How To Report Gains and Losses , later. Military pay chart    If you have a casualty or theft gain on personal-use property that you choose to postpone reporting (as explained next) and you also have another casualty or theft loss on personal-use property, do not consider the gain you are postponing when figuring your casualty or theft loss deduction. Military pay chart See 10% Rule under Deduction Limits, earlier. Military pay chart Postponement of 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 or stolen property. Military pay chart Your basis in the new property is generally the same as your adjusted basis in the property it replaces. Military pay chart You must ordinarily report the gain on your stolen or destroyed property if you receive money or unlike property as reimbursement. Military pay chart However, you can choose to postpone reporting the gain if you purchase property that is similar or related in service or use to the stolen or destroyed property within a specified replacement period, discussed later. Military pay chart You also can choose to postpone reporting the gain if you purchase a controlling interest (at least 80%) in a corporation owning property that is similar or related in service or use to the property. Military pay chart See Controlling interest in a corporation , later. Military pay chart If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. Military pay chart To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. Military pay chart 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. Military pay chart Example. Military pay chart In 1970, you bought an oceanfront cottage for your personal use at a cost of $18,000. Military pay chart You made no further improvements or additions to it. Military pay chart When a storm destroyed the cottage this January, the cottage was worth $250,000. Military pay chart You received $146,000 from the insurance company in March. Military pay chart You had a gain of $128,000 ($146,000 − $18,000). Military pay chart You spent $144,000 to rebuild the cottage. Military pay chart Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. Military pay chart Buying replacement property from a related person. Military pay chart   You cannot postpone reporting a gain from a casualty or theft if you buy the replacement property from a related person (discussed later). Military pay chart This rule applies to the following taxpayers. Military pay chart C corporations. Military pay chart Partnerships in which more than 50% of the capital or profits interests is owned by C corporations. Military pay chart All others (including individuals, partnerships — other than those in (2) — and S corporations) if the total realized gain for the tax year on all destroyed or stolen properties on which there are realized gains is more than $100,000. Military pay chart For casualties and thefts described in (3) above, gains cannot be offset by any losses when determining whether the total gain is more than $100,000. Military pay chart If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. Military pay chart If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. Military pay chart Exception. Military pay chart   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 destroyed or stolen property. Military pay chart Related persons. Military pay chart   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. Military pay chart For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Military pay chart Death of a taxpayer. Military pay chart   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. Military pay chart The executor of the estate or the person succeeding to the funds from the casualty or theft cannot postpone reporting the gain by buying replacement property. Military pay chart Replacement Property You must buy replacement property for the specific purpose of replacing your destroyed or stolen property. Military pay chart Property you acquire as a gift or inheritance does not qualify. Military pay chart You do not have to use the same funds you receive as