Report the loss on the 2018 return.
In the case of disaster losses the disaster year can be the year after the actual disaster. This is due to the difficulty in ascertaining the actual insurance reimbursement and loss actually incurred by the taxpayer.
See the following from the Form 4684 instructions related to disaster losses:
Disaster year.
The disaster year is the tax year in which you sustained the loss attributable to a federally declared disaster. Generally, a disaster loss is sustained in the year the disaster occurred. However, a disaster loss may also be sustained in a year after the disaster occurred. For example, if a claim for reimbursement exists for which there is a reasonable prospect of recovery, no part of the loss for which reimbursement may be received is sustained until it can be ascertained with reasonable certainty whether you will be reimbursed.
Example.In December 2017, your car was destroyed in severe flooding that occurred in the area where you live. The area where you lived was designated by the Federal Emergency Management Agency (FEMA) to be eligible for public or individual assistance (or both). You immediately filed a claim for reimbursement with your insurance company. There was a reasonable prospect that you would recover the full amount of your loss. The claim was settled in January 2018 when your insurance company reimbursed you for only half of your loss. The disaster year is 2018 (not 2017 when the loss occurred). Your loss was sustained in 2018 because that’s when it became reasonably certain whether you would be reimbursed. You can either deduct the unreimbursed loss on your tax return for the disaster year (2018) or make an election to deduct the unreimbursed loss on your tax return for the preceding year (2017).
