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Taxact2010

H And R Block Com2012 Federal Tax FormTax UnemployedE File 2011 Tax ReturnTax Software FreeH And R Block EfileTurbotax 2012 Tax ReturnFile Taxes FreeTax Preparation SoftwareFile 1040x Online Amended ReturnI Didn T File 2011 TaxesH&r Block File For FreeAmending 2012 Tax ReturnFreetaxusa ComHow To File Unemployment On Tax ReturnFree Tax Usa 2012Irs Gov Free FileUnemployed Tax CreditFree State Tax Filing TurbotaxHow Far Back Can I Amend A Tax ReturnForm 1040nrFile 2007 Taxes For FreeFree E File For State TaxesHow To Do A Tax AmendmentH&r Block Free Tax FilingTaxact Com1040nr Efile 20121040ez Instruction BookMilitary Tax ReturnsIrs 1040x 2011My1040ez ComHr BlockHow Do I Amend My Tax ReturnAmending 2011 Taxes1040 Tax FormHow To File An Amendment On Taxes1040ez 2013 InstructionsHnrblock ComFile My 2010 Taxes OnlineH & R Block Free Filing

Taxact2010

Taxact2010 Index A Asistencia, Cómo Obtener Ayuda con los Impuestos Ayuda, Cómo Obtener Ayuda con los Impuestos Ayuda tributaria, Cómo Obtener Ayuda con los Impuestos B Base ajustada Hoja de Trabajo 1 para calcular, Instrucciones para la Hoja de Trabajo A. Taxact2010 H Hojas de Trabajo Base ajustada (Hoja de Trabajo 1), Instrucciones para la Hoja de Trabajo A. Taxact2010 I Información de usuarios de equipo TTY/TDD, Cómo Obtener Ayuda con los Impuestos M Más información, Cómo Obtener Ayuda con los Impuestos P Publicaciones, Cómo Obtener Ayuda con los Impuestos S Servicios Tributario Gratuito, Cómo Obtener Ayuda con los Impuestos V Vea la ayuda tributaria, Cómo Obtener Ayuda con los Impuestos Prev  Up     Home   More Online Publications
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Contact My Local Office in South Dakota

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City  Street Address  Days/Hours of Service  Telephone* 
Aberdeen  115 Fourth Ave. S.E.
Aberdeen, SD 57401 

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 11:00 a.m. - 12:00 noon)

 

Services Provided

(605) 226-7273 
Rapid City  515 Ninth St.
Rapid City, SD 57701 

Monday-Friday - 8:30 a.m.- 4:30 p.m. 
(Closed for lunch 1:00 p.m. - 2:00 p.m.)

 

Services Provided

(605) 348-2006 
Sioux Falls  1720 S. Southeastern Ave.
Sioux Falls, SD 57103 

Monday-Friday - 8:30 a.m.-4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(605) 330-4539 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If  face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service: Call (605) 377-1600 in Aberdeen or 1-877-777-4778 elsewhere, or see  Publication 1546, The Taxpayer Advocate Service of the IRS.

For further information, see  Tax Topic 104

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
115 4th Ave. SE
Aberdeen, SD 57401

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Taxact2010

Taxact2010 11. Taxact2010   Casualties, Thefts, and Condemnations Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Casualties and TheftsDeductible losses. Taxact2010 Nondeductible losses. Taxact2010 Family pet. Taxact2010 Progressive deterioration. Taxact2010 Decline in market value of stock. Taxact2010 Mislaid or lost property. Taxact2010 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. Taxact2010 Related persons. Taxact2010 Replacement Property Replacement Period How To Postpone Gain Disaster Area LossesWho is eligible. Taxact2010 Covered disaster area. Taxact2010 Reporting Gains and Losses Introduction This chapter explains the tax treatment of casualties, thefts, and condemnations. Taxact2010 A casualty occurs when property is damaged, destroyed, or lost due to a sudden, unexpected, or unusual event. Taxact2010 A theft occurs when property is stolen. Taxact2010 A condemnation occurs when private property is legally taken for public use without the owner's consent. Taxact2010 A casualty, theft, or condemnation may result in a deductible loss or taxable gain on your federal income tax return. Taxact2010 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. Taxact2010 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. Taxact2010 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. Taxact2010 For more information, see Postponing Gain , later. Taxact2010 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. Taxact2010 Casualties and Thefts If your property is destroyed, damaged, or stolen, you may have a deductible loss. Taxact2010 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. Taxact2010 Casualty. Taxact2010   A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Taxact2010 A sudden event is one that is swift, not gradual or progressive. Taxact2010 An unexpected event is one that is ordinarily unanticipated and unintended. Taxact2010 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. Taxact2010 Deductible losses. Taxact2010   Deductible casualty losses can result from a number of different causes, including the following. Taxact2010 Airplane crashes. Taxact2010 Car, truck, or farm equipment accidents not resulting from your willful act or willful negligence. Taxact2010 Earthquakes. Taxact2010 Fires (but see Nondeductible losses next for exceptions). Taxact2010 Floods. Taxact2010 Freezing. Taxact2010 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. Taxact2010 Lightning. Taxact2010 Storms, including hurricanes and tornadoes. Taxact2010 Terrorist attacks. Taxact2010 Vandalism. Taxact2010 Volcanic eruptions. Taxact2010 Nondeductible losses. Taxact2010   A casualty loss is not deductible if the damage or destruction is caused by the following. Taxact2010 Accidentally breaking articles such as glassware or china under normal conditions. Taxact2010 A family pet (explained below). Taxact2010 A fire if you willfully set it, or pay someone else to set it. Taxact2010 A car, truck, or farm equipment accident if your willful negligence or willful act caused it. Taxact2010 The same is true if the willful act or willful negligence of someone acting for you caused the accident. Taxact2010 Progressive deterioration (explained below). Taxact2010 Family pet. Taxact2010   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. Taxact2010 Example. Taxact2010 You keep your horse in your yard. Taxact2010 The ornamental fruit trees in your yard were damaged when your horse stripped the bark from them. Taxact2010 Some of the trees were completely girdled and died. Taxact2010 Because the damage was not unexpected or unusual, the loss is not deductible. Taxact2010 Progressive deterioration. Taxact2010   Loss of property due to progressive deterioration is not deductible as a casualty loss. Taxact2010 This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event. Taxact2010 Examples of damage due to progressive deterioration include damage from rust, corrosion, or termites. Taxact2010 However, weather-related conditions or disease may cause another type of involuntary conversion. Taxact2010 See Other Involuntary Conversions , later. Taxact2010 Theft. Taxact2010   A theft is the taking and removing of money or property with the intent to deprive the owner of it. Taxact2010 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. Taxact2010 You do not need to show a conviction for theft. Taxact2010   Theft includes the taking of money or property by the following means: Blackmail, Burglary, Embezzlement, Extortion, Kidnapping for ransom, Larceny, Robbery, or Threats. Taxact2010 The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law. Taxact2010 Decline in market value of stock. Taxact2010   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. Taxact2010 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. Taxact2010 You report a capital loss on Schedule D (Form 1040). Taxact2010 For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Publication 550. Taxact2010 Mislaid or lost property. Taxact2010   The simple disappearance of money or property is not a theft. Taxact2010 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. Taxact2010 Example. Taxact2010 A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. Taxact2010 The diamond falls from the ring and is never found. Taxact2010 The loss of the diamond is a casualty. Taxact2010 Farming Losses You can deduct certain casualty or theft losses that occur in the business of farming. Taxact2010 The following is a discussion of some losses you can deduct and some you cannot deduct. Taxact2010 Livestock or produce bought for resale. Taxact2010   Casualty or theft losses of livestock or produce bought for resale are deductible if you report your income on the cash method. Taxact2010 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. Taxact2010 You cannot take a separate deduction. Taxact2010 Livestock, plants, produce, and crops raised for sale. Taxact2010   Losses of livestock, plants, produce, and crops raised for sale are generally not deductible if you report your income on the cash method. Taxact2010 You have already deducted the cost of raising these items as farm expenses, so their basis is equal to zero. Taxact2010   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. Taxact2010 You usually have a tax basis if you capitalized the expenses associated with these plants under the uniform capitalization rules. Taxact2010 The uniform capitalization rules are discussed in chapter 6. Taxact2010   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. Taxact2010 You get the deduction by omitting the item from your inventory at the close of your tax year. Taxact2010 You cannot take a separate casualty or theft deduction. Taxact2010 Income loss. Taxact2010   A loss of future income is not deductible. Taxact2010 Example. Taxact2010 A severe flood destroyed your crops. Taxact2010 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 . Taxact2010 You estimate that the crop loss will reduce your farm income by $25,000. Taxact2010 This loss of future income is also not deductible. Taxact2010 Loss of timber. Taxact2010   If you sell timber downed as a result of a casualty, treat the proceeds from the sale as a reimbursement. Taxact2010 If you use the proceeds to buy qualified replacement property, you can postpone reporting the gain. Taxact2010 See Postponing Gain , later. Taxact2010 Property used in farming. Taxact2010   Casualty and theft losses of property used in your farm business usually result in deductible losses. Taxact2010 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. Taxact2010 See How To Figure a Loss , later. Taxact2010 Raised draft, breeding, dairy, or sporting animals. Taxact2010   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. Taxact2010 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. Taxact2010 You use inventories to determine your income and you included the animals in your inventory. Taxact2010 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. Taxact2010 When you include livestock in inventory, its last inventory value is its basis. Taxact2010 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. Taxact2010 You cannot take a separate deduction. Taxact2010 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. Taxact2010 Farm property. Taxact2010   Farm property is the property you use in your farming business. Taxact2010 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. Taxact2010   If your farm property was partially damaged, use the steps shown under Personal-use property next to figure your casualty loss. Taxact2010 However, the deduction limits, discussed later, do not apply to farm property. Taxact2010 Personal-use property. Taxact2010   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. Taxact2010 The following items are examples of personal-use property: Your main home. Taxact2010 Furniture and electronics used in your main home and not used in a home office or for business purposes. Taxact2010 Clothing and jewelry. Taxact2010 An automobile used for nonbusiness purposes. Taxact2010 You figure the casualty or theft loss on this property by taking the following steps. Taxact2010 Determine your adjusted basis in the property before the casualty or theft. Taxact2010 Determine the decrease in fair market value of the property as a result of the casualty or theft. Taxact2010 From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you receive or expect to receive. Taxact2010 You must apply the deduction limits, discussed later, to determine your deductible loss. Taxact2010    You can use Publication 584 to list your stolen or damaged personal-use property and figure your loss. Taxact2010 It includes schedules to help you figure the loss on your home, its contents, and your motor vehicles. Taxact2010 Adjusted basis. Taxact2010   Adjusted basis is your basis (usually cost) increased or decreased by various events, such as improvements and casualty losses. Taxact2010 For more information about adjusted basis, see chapter 6. Taxact2010 Decrease in fair market value (FMV). Taxact2010   The decrease in FMV is the difference between the property's value immediately before the casualty or theft and its value immediately afterward. Taxact2010 FMV is defined in chapter 10 under Payments Received or Considered Received . Taxact2010 Appraisal. Taxact2010   To figure the decrease in FMV because of a casualty or theft, you generally need a competent appraisal. Taxact2010 But other measures, such as the cost of cleaning up or making repairs (discussed next) can be used to establish decreases in FMV. Taxact2010   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. Taxact2010 The appraiser must recognize the effects of any general market decline that may occur along with the casualty. Taxact2010 This information is needed to limit any deduction to the actual loss resulting from damage to the property. Taxact2010 Cost of cleaning up or making repairs. Taxact2010   The cost of cleaning up after a casualty is not part of a casualty loss. Taxact2010 Neither is the cost of repairing damaged property after a casualty. Taxact2010 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. Taxact2010 The repairs are actually made. Taxact2010 The repairs are necessary to bring the property back to its condition before the casualty. Taxact2010 The amount spent for repairs is not excessive. Taxact2010 The repairs fix the damage only. Taxact2010 The value of the property after the repairs is not, due to the repairs, more than the value of the property before the casualty. Taxact2010 Related expenses. Taxact2010   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. Taxact2010 However, they may be deductible as farm business expenses if the damaged or stolen property is farm property. Taxact2010 Separate computations for more than one item of property. Taxact2010   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. Taxact2010 Then combine the losses to determine your total loss. Taxact2010    There is an exception to this rule for personal-use real property. Taxact2010 See Exception for personal-use real property, later. Taxact2010 Example. Taxact2010 A fire on your farm damaged a tractor and the barn in which it was stored. Taxact2010 The tractor had an adjusted basis of $3,300. Taxact2010 Its FMV was $28,000 just before the fire and $10,000 immediately afterward. Taxact2010 The barn had an adjusted basis of $28,000. Taxact2010 Its FMV was $55,000 just before the fire and $25,000 immediately afterward. Taxact2010 You received insurance reimbursements of $2,100 on the tractor and $26,000 on the barn. Taxact2010 Figure your deductible casualty loss separately for the two items of property. Taxact2010     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. Taxact2010   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. Taxact2010 Figure the loss using the smaller of the following. Taxact2010 The decrease in FMV of the entire property. Taxact2010 The adjusted basis of the entire property. Taxact2010 Example. Taxact2010 You bought a farm in 1990 for $160,000. Taxact2010 The adjusted basis of the residential part is now $128,000. Taxact2010 In 2013, a windstorm blew down shade trees and three ornamental trees planted at a cost of $7,500 on the residential part. Taxact2010 The adjusted basis of the residential part includes the $7,500. Taxact2010 The fair market value (FMV) of the residential part immediately before the storm was $400,000, and $385,000 immediately after the storm. Taxact2010 The trees were not covered by insurance. Taxact2010 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. Taxact2010   If you receive an insurance or other type of reimbursement, you must subtract the reimbursement when you figure your loss. Taxact2010 You do not have a casualty or theft loss to the extent you are reimbursed. Taxact2010   If you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. Taxact2010 You must reduce your loss even if you do not receive payment until a later tax year. Taxact2010    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. Taxact2010 You may have to include a portion of these payments in your income. Taxact2010 See Insurance payments for living expenses in Publication 547 for details. Taxact2010 Disaster relief. Taxact2010   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. Taxact2010 Excludable cash gifts you receive also do not reduce your casualty loss if there are no limits on how you can use the money. Taxact2010   Generally, disaster relief grants received under the Robert T. Taxact2010 Stafford Disaster Relief and Emergency Assistance Act are not included in your income. Taxact2010 See Federal disaster relief grants , later, under Disaster Area Losses . Taxact2010   Qualified disaster relief payments for expenses you incurred as a result of a federally declared disaster are not taxable income to you. Taxact2010 See Qualified disaster relief payments , later, under Disaster Area Losses . Taxact2010 Reimbursement received after deducting loss. Taxact2010   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. Taxact2010 Actual reimbursement less than expected. Taxact2010   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. Taxact2010 Actual reimbursement more than expected. Taxact2010   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. Taxact2010 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. Taxact2010 Do not refigure your tax for the year you claimed the deduction. Taxact2010 See Recoveries in Publication 525 to find out how much extra reimbursement to include in income. Taxact2010 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. Taxact2010 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. Taxact2010 Actual reimbursement same as expected. Taxact2010   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. Taxact2010 Lump-sum reimbursement. Taxact2010   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. Taxact2010 Figure the gain or loss separately for each asset that has a separate basis. Taxact2010 Adjustments to basis. Taxact2010   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. Taxact2010 The result is your adjusted basis in the property. Taxact2010 Amounts you spend on repairs to restore your property to its pre-casualty condition increase your adjusted basis. Taxact2010 See Adjusted Basis in chapter 6 for more information. Taxact2010 Example. Taxact2010 You built a new silo for $25,000. Taxact2010 This is the basis in your silo because that is the total cost you incurred to build it. Taxact2010 During the year, a tornado damaged your silo and your allowable casualty loss deduction was $1,000. Taxact2010 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. Taxact2010 Your adjusted basis in the silo after the casualty is $26,000 ($25,000 - $1,000 - $4,000 + $6,000). Taxact2010 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). Taxact2010 There are two limits on the deduction for casualty or theft loss of personal-use property. Taxact2010 You figure these limits on Form 4684. Taxact2010 $100 rule. Taxact2010   You must reduce each casualty or theft loss on personal-use property by $100. Taxact2010 This rule applies after you have subtracted any reimbursement. Taxact2010 10% rule. Taxact2010   You must further reduce the total of all your casualty or theft losses on personal-use property by 10% of your adjusted gross income. Taxact2010 Apply this rule after you reduce each loss by $100. Taxact2010 Adjusted gross income is on line 38 of Form 1040. Taxact2010 Example. Taxact2010 In June, you discovered that your house had been burglarized. Taxact2010 Your loss after insurance reimbursement was $2,000. Taxact2010 Your adjusted gross income for the year you discovered the burglary is $57,000. Taxact2010 Figure your theft loss deduction as follows: 1. Taxact2010 Loss after insurance $2,000 2. Taxact2010 Subtract $100 100 3. Taxact2010 Loss after $100 rule $1,900 4. Taxact2010 Subtract 10% (. Taxact2010 10) × $57,000 AGI $5,700 5. Taxact2010 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). Taxact2010    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. Taxact2010 See 10% Rule in Publication 547. Taxact2010 When Loss Is Deductible Generally, you can deduct casualty losses that are not reimbursable only in the tax year in which they occur. Taxact2010 You generally can deduct theft losses that are not reimbursable only in the year you discover your property was stolen. Taxact2010 However, losses in federally declared disaster areas are subject to different rules. Taxact2010 See Disaster Area Losses , later, for an exception. Taxact2010 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. Taxact2010 Leased property. Taxact2010   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. Taxact2010 This is true even if the loss occurred or the liability was paid in a different year. Taxact2010 You are not entitled to a deduction until your liability under the lease can be determined with reasonable accuracy. Taxact2010 Your liability can be determined when a claim for recovery is settled, adjudicated, or abandoned. Taxact2010 Example. Taxact2010 Robert leased a tractor from First Implement, Inc. Taxact2010 , for use in his farm business. Taxact2010 The tractor was destroyed by a tornado in June 2012. Taxact2010 The loss was not insured. Taxact2010 First Implement billed Robert for the fair market value of the tractor on the date of the loss. Taxact2010 Robert disagreed with the bill and refused to pay it. Taxact2010 First Implement later filed suit in court against Robert. Taxact2010 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. Taxact2010 Robert paid $20,000 in June 2013. Taxact2010 He can claim the $20,000 as a loss on his 2013 tax return. Taxact2010 Net operating loss (NOL). Taxact2010   If your deductions, including casualty or theft loss deductions, are more than your income for the year, you may have an NOL. Taxact2010 An NOL can be carried back or carried forward and deducted from income in other years. Taxact2010 See Publication 536 for more information on NOLs. Taxact2010 Proof of Loss To deduct a casualty or theft loss, you must be able to prove that there was a casualty or theft. Taxact2010 You must have records to support the amount you claim for the loss. Taxact2010 Casualty loss proof. Taxact2010   For a casualty loss, your records should show all the following information. Taxact2010 The type of casualty (car accident, fire, storm, etc. Taxact2010 ) and when it occurred. Taxact2010 That the loss was a direct result of the casualty. Taxact2010 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. Taxact2010 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Taxact2010 Theft loss proof. Taxact2010   For a theft loss, your records should show all the following information. Taxact2010 When you discovered your property was missing. Taxact2010 That your property was stolen. Taxact2010 That you were the owner of the property. Taxact2010 Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery. Taxact2010 Figuring a Gain A casualty or theft may result in a taxable gain. Taxact2010 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. Taxact2010 You generally report your gain as income in the year you receive the reimbursement. Taxact2010 However, depending on the type of property you receive, you may not have to report your gain. Taxact2010 See Postponing Gain , later. Taxact2010 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. Taxact2010 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. Taxact2010 Amount you receive. Taxact2010   The amount you receive includes any money plus the value of any property you receive, minus any expenses you have in obtaining reimbursement. Taxact2010 It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property. Taxact2010 Example. Taxact2010 A tornado severely damaged your barn. Taxact2010 The adjusted basis of the barn was $25,000. Taxact2010 Your insurance company reimbursed you $40,000 for the damaged barn. Taxact2010 However, you had legal expenses of $2,000 to collect that insurance. Taxact2010 Your insurance minus your expenses to collect the insurance is more than your adjusted basis in the barn, so you have a gain. Taxact2010 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. Taxact2010 Some of these are discussed in the following paragraphs. Taxact2010 Gain or loss from an involuntary conversion of your property is usually recognized for tax purposes. Taxact2010 You report the gain or deduct the loss on your tax return for the year you realize it. Taxact2010 However, depending on the type of property you receive, you may not have to report your gain on the involuntary conversion. Taxact2010 See Postponing Gain , later. Taxact2010 Condemnation Condemnation is the process by which private property is legally taken for public use without the owner's consent. Taxact2010 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. Taxact2010 The owner receives a condemnation award (money or property) in exchange for the property taken. Taxact2010 A condemnation is a forced sale, the owner being the seller and the condemning authority being the buyer. Taxact2010 Threat of condemnation. Taxact2010   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. Taxact2010 Main home condemned. Taxact2010   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. Taxact2010 For information on this exclusion, see Publication 523. Taxact2010 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. Taxact2010 See Postponing Gain , later. Taxact2010 (You cannot deduct a loss from the condemnation of your main home. Taxact2010 ) More information. Taxact2010   For information on how to figure the gain or loss on condemned property, see chapter 1 in Publication 544. Taxact2010 Also see Postponing Gain , later, to find out if you can postpone reporting the gain. Taxact2010 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. Taxact2010 Livestock Losses Diseased livestock. Taxact2010   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. Taxact2010 If the livestock were raised or purchased for resale, follow the rules for livestock discussed earlier under Farming Losses . Taxact2010 Otherwise, figure the gain or loss from these conversions using the rules discussed under Determining Gain or Loss in chapter 8. Taxact2010 If you replace the livestock, you may be able to postpone reporting the gain. Taxact2010 See Postponing Gain below. Taxact2010 Reporting dispositions of diseased livestock. Taxact2010   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. Taxact2010 You must also include other information on this statement. Taxact2010 See How To Postpone Gain , later, under Postponing Gain . Taxact2010 Weather-related sales of livestock. Taxact2010   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. Taxact2010 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. Taxact2010 Figure the gain or loss using the rules discussed under Determining Gain or Loss in chapter 8. Taxact2010 If you replace the livestock, you may be able to postpone reporting the gain. Taxact2010 See Postponing Gain below. Taxact2010 Example. Taxact2010 It is your usual business practice to sell five of your dairy animals during the year. Taxact2010 This year you sold 20 dairy animals because of drought. Taxact2010 The sale of 15 animals is treated as an involuntary conversion. Taxact2010    If you do not replace the livestock, you may be able to report the gain in the following year's income. Taxact2010 This rule also applies to other livestock (including poultry). Taxact2010 See Sales Caused by Weather-Related Conditions in chapter 3. Taxact2010 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. Taxact2010 Treat the loss as a loss from an involuntary conversion. Taxact2010 The loss equals the previously capitalized reforestation costs you had to duplicate on replanting. Taxact2010 You deduct the loss on the return for the year the seedlings died. Taxact2010 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. Taxact2010 Your basis in the new property is generally the same as your adjusted basis in the property it replaces. Taxact2010 You must ordinarily report the gain on your stolen, destroyed, or other involuntarily converted property if you receive money or unlike property as reimbursement. Taxact2010 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. Taxact2010 If you have a gain on damaged property, you can postpone reporting the gain if you spend the reimbursement to restore the property. Taxact2010 To postpone reporting all the gain, the cost of your replacement property must be at least as much as the reimbursement you receive. Taxact2010 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. Taxact2010 Example 1. Taxact2010 In 1985, you constructed a barn to store farm equipment at a cost of $20,000. Taxact2010 In 1987, you added a silo to the barn at a cost of $15,000 to store grain. Taxact2010 In May of this year, the property was worth $100,000. Taxact2010 In June the barn and silo were destroyed by a tornado. Taxact2010 At the time of the tornado, you had an adjusted basis of $0 in the property. Taxact2010 You received $85,000 from the insurance company. Taxact2010 You had a gain of $85,000 ($85,000 – $0). Taxact2010 You spent $80,000 to rebuild the barn and silo. Taxact2010 Since this is less than the insurance proceeds received, you must include $5,000 ($85,000 – $80,000) in your income. Taxact2010 Example 2. Taxact2010 In 1970, you bought a cabin in the mountains for your personal use at a cost of $18,000. Taxact2010 You made no further improvements or additions to it. Taxact2010 When a storm destroyed the cabin this January, the cabin was worth $250,000. Taxact2010 You received $146,000 from the insurance company in March. Taxact2010 You had a gain of $128,000 ($146,000 − $18,000). Taxact2010 You spent $144,000 to rebuild the cabin. Taxact2010 Since this is less than the insurance proceeds received, you must include $2,000 ($146,000 − $144,000) in your income. Taxact2010 Buying replacement property from a related person. Taxact2010   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). Taxact2010 This rule applies to the following taxpayers. Taxact2010 C corporations. Taxact2010 Partnerships in which more than 50% of the capital or profits interest is owned by C corporations. Taxact2010 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. Taxact2010 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. Taxact2010 If the property is owned by a partnership, the $100,000 limit applies to the partnership and each partner. Taxact2010 If the property is owned by an S corporation, the $100,000 limit applies to the S corporation and each shareholder. Taxact2010 Exception. Taxact2010   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. Taxact2010 Related persons. Taxact2010   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. Taxact2010 For more information on related persons, see Nondeductible Loss under Sales and Exchanges Between Related Persons in chapter 2 of Publication 544. Taxact2010 Death of a taxpayer. Taxact2010   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. Taxact2010 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. Taxact2010 Replacement Property You must buy replacement property for the specific purpose of replacing your property. Taxact2010 Your replacement property must be similar or related in service or use to the property it replaces. Taxact2010 You do not have to use the same funds you receive as reimbursement for your old property to acquire the replacement property. Taxact2010 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. Taxact2010 Property you acquire by gift or inheritance does not qualify as replacement property. Taxact2010 Owner-user. Taxact2010   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. Taxact2010 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. Taxact2010 A grinding mill that replaces a tractor does not qualify. Taxact2010 Neither does a breeding or draft animal that replaces a dairy cow. Taxact2010 Soil or other environmental contamination. Taxact2010   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. Taxact2010 Weather-related conditions. Taxact2010   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. Taxact2010 Example. Taxact2010 Each year you normally sell 25 cows from your beef herd. Taxact2010 However, this year you had to sell 50 cows. Taxact2010 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. Taxact2010 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. Taxact2010 Standing crop destroyed by casualty. Taxact2010   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. Taxact2010 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). Taxact2010 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. Taxact2010 Timber loss. Taxact2010   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. Taxact2010 If you bought the standing timber within the replacement period, you can postpone reporting the gain. Taxact2010 Business or income-producing property located in a federally declared disaster area. Taxact2010   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. Taxact2010 For more information, see Disaster Area Losses in Publication 547. Taxact2010 Substituting replacement property. Taxact2010   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. Taxact2010 This is true even if you acquire the other property within the replacement period. Taxact2010 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. Taxact2010 Basis of replacement property. Taxact2010   You must reduce the basis of your replacement property (its cost) by the amount of postponed gain. Taxact2010 In this way, tax on the gain is postponed until you dispose of the replacement property. Taxact2010 Replacement Period To postpone reporting your gain, you must buy replacement property within a specified period of time. Taxact2010 This is the replacement period. Taxact2010 The replacement period begins on the date your property was damaged, destroyed, stolen, sold, or exchanged. Taxact2010 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. Taxact2010 Example. Taxact2010 You are a calendar year taxpayer. Taxact2010 While you were on vacation, farm equipment that cost $2,200 was stolen from your farm. Taxact2010 You discovered the theft when you returned to your farm on November 11, 2012. Taxact2010 Your insurance company investigated the theft and did not settle your claim until January 5, 2013, when they paid you $3,000. Taxact2010 You first realized a gain from the reimbursement for the theft during 2013, so you have until December 31, 2015, to replace the property. Taxact2010 Main home in disaster area. Taxact2010   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. Taxact2010 See Disaster Area Losses , later. Taxact2010 Property in the Midwestern disaster areas. Taxact2010   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. Taxact2010 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Midwestern disaster areas. Taxact2010 Property in the Kansas disaster area. Taxact2010   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. Taxact2010 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Kansas disaster area. Taxact2010 Property in the Hurricane Katrina disaster area. Taxact2010   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. Taxact2010 This 5-year replacement period applies only if substantially all of the use of the replacement property is in the Hurricane Katrina disaster area. Taxact2010 Weather-related sales of livestock in an area eligible for federal assistance. Taxact2010   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. Taxact2010 The IRS may extend the replacement period on a regional basis if the weather-related conditions continue for longer than 3 years. Taxact2010   For information on extensions of the replacement period because of persistent drought, see Notice 2006-82, 2006-39 I. Taxact2010 R. Taxact2010 B. Taxact2010 529, available at  www. Taxact2010 irs. Taxact2010 gov/irb/2006-39_IRB/ar11. Taxact2010 html. Taxact2010 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. Taxact2010 gov. Taxact2010 Condemnation. Taxact2010   The replacement period for a condemnation begins on the earlier of the following dates. Taxact2010 The date on which you disposed of the condemned property. Taxact2010 The date on which the threat of condemnation began. Taxact2010 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. Taxact2010 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. Taxact2010 Business or investment real property. Taxact2010   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. Taxact2010 Extension. Taxact2010   You can apply for an extension of the replacement period. Taxact2010 Send your written application to the Internal Revenue Service Center where you file your tax return. Taxact2010 See your tax return instructions for the address. Taxact2010 Include all the details about your need for an extension. Taxact2010 Make your application before the end of the replacement period. Taxact2010 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. Taxact2010 You will get an extension of the replacement period if you can show reasonable cause for not making the replacement within the regular period. Taxact2010 How To Postpone Gain You postpone reporting your gain by reporting your choice on your tax return for the year you have the gain. Taxact2010 You have the gain in the year you receive insurance proceeds or other reimbursements that result in a gain. Taxact2010 Required statement. Taxact2010   You should attach a statement to your return for the year you have the gain. Taxact2010 This statement should include all the following information. Taxact2010 The date and details of the casualty, theft, or other involuntary conversion. Taxact2010 The insurance or other reimbursement you received. Taxact2010 How you figured the gain. Taxact2010 Replacement property acquired before return filed. Taxact2010   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. Taxact2010 The replacement property. Taxact2010 The postponed gain. Taxact2010 The basis adjustment that reflects the postponed gain. Taxact2010 Any gain you are reporting as income. Taxact2010 Replacement property acquired after return filed. Taxact2010   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. Taxact2010   You should then attach another statement to your return for the year in which you buy the replacement property. Taxact2010 This statement should contain detailed information on the replacement property. Taxact2010 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. Taxact2010 Include in the statement detailed information on the replacement property bought in that year. Taxact2010 Reporting weather-related sales of livestock. Taxact2010   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. Taxact2010 Evidence of the weather-related conditions that forced the sale or exchange of the livestock. Taxact2010 The gain realized on the sale or exchange. Taxact2010 The number and kind of livestock sold or exchanged. Taxact2010 The number of livestock of each kind you would have sold or exchanged under your usual business practice. Taxact2010   Show all the following information and the preceding information on the return for the year in which you replace the livestock. Taxact2010 The dates you bought the replacement property. Taxact2010 The cost of the replacement property. Taxact2010 Description of the replacement property (for example, the number and kind of the replacement livestock). Taxact2010 Amended return. Taxact2010   You must file an amended return (Form 1040X) for the tax year of the gain in either of the following situations. Taxact2010 You do not acquire replacement property within the replacement period, plus extensions. Taxact2010 On this amended return, you must report the gain and pay any additional tax due. Taxact2010 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. Taxact2010 On this amended return, you must report the part of the gain that cannot be postponed and pay any additional tax due. Taxact2010 Disaster Area Losses Special rules apply to federally declared disaster area losses. Taxact2010 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. Taxact2010 Stafford Disaster Relief and Emergency Assistance Act. Taxact2010 It includes a major disaster or emergency declaration under the act. Taxact2010 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. Taxact2010 fema. Taxact2010 gov. Taxact2010 This part discusses the special rules for when to deduct a disaster area loss and what tax deadlines may be postponed. Taxact2010 For other special rules, see Disaster Area Losses in Publication 547. Taxact2010 When to deduct the loss. Taxact2010   You generally must deduct a casualty loss in the year it occurred. Taxact2010 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. Taxact2010 If you make this choice, the loss is treated as having occurred in the preceding year. Taxact2010    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. Taxact2010   You must make the choice to take your casualty loss for the disaster in the preceding year by the later of the following dates. Taxact2010 The due date (without extensions) for filing your tax return for the tax year in which the disaster actually occurred. Taxact2010 The due date (with extensions) for the return for the preceding tax year. Taxact2010 Federal disaster relief grants. Taxact2010   Do not include post-disaster relief grants received under the Robert T. Taxact2010 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. Taxact2010 Do not deduct casualty losses or medical expenses to the extent they are specifically reimbursed by these disaster relief grants. Taxact2010 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. Taxact2010 Unemployment assistance payments under the Act are taxable unemployment compensation. Taxact2010 Qualified disaster relief payments. Taxact2010   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. Taxact2010 These payments are not subject to income tax, self-employment tax, or employment taxes (social security, Medicare, and federal unemployment taxes). Taxact2010 No withholding applies to these payments. Taxact2010   Qualified disaster relief payments include payments you receive (regardless of the source) for the following expenses. Taxact2010 Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a federally declared disaster. Taxact2010 Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence due to a federally declared disaster. Taxact2010 (A personal residence can be a rented residence or one you own. Taxact2010 ) Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence due to a federally declared disaster. Taxact2010   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. Taxact2010    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. Taxact2010 Qualified disaster mitigation payments. Taxact2010   Qualified disaster mitigation payments made under the Robert T. Taxact2010 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. Taxact2010 These are payments you, as a property owner, receive to reduce the risk of future damage to your property. Taxact2010 You cannot increase your basis in property, or take a deduction or credit, for expenditures made with respect to those payments. Taxact2010 Sale of property under hazard mitigation program. Taxact2010   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. Taxact2010 You report the gain or deduct the loss on your tax return for the year you realize it. Taxact2010 (You cannot deduct a loss on personal-use property unless the loss resulted from a casualty, as discussed earlier. Taxact2010 ) 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. Taxact2010 See Postponing Gain , earlier, for the rules that apply. Taxact2010 Other federal assistance programs. Taxact2010    For more information about other federal assistance programs, see Crop Insurance and Crop Disaster Payments and Feed Assistance and Payments in chapter 3 earlier. Taxact2010 Postponed tax deadlines. Taxact2010   The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. Taxact2010 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. Taxact2010   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). Taxact2010 Go to http://www. Taxact2010 irs. Taxact2010 gov/uac/Tax-Relief-in-Disaster-Situations to find out if a tax deadline has been postponed for your area. Taxact2010 Who is eligible. Taxact2010   If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement. Taxact2010 Any individual whose main home is located in a covered disaster area (defined next). Taxact2010 Any business entity or sole proprietor whose principal place of business is located in a covered disaster area. Taxact2010 Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered disaster area. Taxact2010 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. Taxact2010 The main home or principal place of business does not have to be located in the covered disaster area. Taxact2010 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. Taxact2010 The spouse on a joint return with a taxpayer who is eligible for postponements. Taxact2010 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. Taxact2010 Any individual visiting the covered disaster area who was killed or injured as a result of the disaster. Taxact2010 Any other person determined by the IRS to be affected by a federally declared disaster. Taxact2010 Covered disaster area. Taxact2010   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. Taxact2010 Abatement of interest and penalties. Taxact2010   The IRS may abate the interest and penalties on the underpaid income tax for the length of any postponement of tax deadlines. Taxact2010 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. Taxact2010 Form 4684. Taxact2010   Use this form to report your gains and losses from casualties and thefts. Taxact2010 Form 4797. Taxact2010   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. Taxact2010 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. Taxact2010 Form 8949. Taxact2010   Use this form to report gain from an involuntary conversion (other than from casualty or theft) of personal-use property. Taxact2010 Schedule A (Form 1040). Taxact2010   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. Taxact2010 Schedule D (Form 1040). Taxact2010   Use this form to carry over the following gains. Taxact2010 Net gain shown on Form 4797 from an involuntary conversion of business property held for more than 1 year. Taxact2010 Net gain shown on Form 4684 from the casualty or theft of personal-use property. Taxact2010    Also use this form to figure the overall gain or loss from transactions reported on Form 8949. Taxact2010 Schedule F (Form 1040). Taxact2010   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. Taxact2010 Prev  Up  Next   Home   More Online Publications