This doesn't work if the activity is rental. it can become part of the PAL which might not be allowed
the taxpayer needs to tell us the activity or business in which the asset was used. it could be a passive activity or a business activity. in this regard, I disagree with Tax Experts since there can be business casualty losses reportable in section B of form 4684. however, TurboTax is not sophisticated enough to handle this loss that way - carry the info to the 4684 and not continue to depreciate the asset. so if a trade or business I would follow Tax Experts advice just indicate it's sold.
on the other hand, if it is rental or other passive activity the method suggested doesn't work the loss would become part of the passive loss subject to the passive loss limits. so what I would do is indicate that it was disposed of on whatever date the casualty occurred. depreciation would calculate for the year. for sales price enter the net tax basis. thus there would be no gain or loss on it. the 4797 should show this. then on the 4684 section B I would enter the information requeste. forr cost or basis use the net tax basis
