The IRS allows taxpayers to deduct the loss of a motor vehicle resulting from a casualty. A casualty is damage, destruction or loss of property that results from a sudden, unexpected or unusual event. These are infrequent events that occur swiftly and without notice. Common casualties that adversely affect motor vehicles are accidents, fires, vandalism and earthquakes. However, the damage or loss of a motor vehicle is not deductible if you are willfully negligent in causing the accident.
You can enter casualty losses in your return, this done through the Casualty and Theft deduction.
To enter this in TurboTax:
- Got to the "Federal Taxes" tab
- Click on "Deductions & Credit"
- Scroll down to "Other Deductions and Credits" and click on "show more" to the right of it
- Click "Start" next to "Casualties and Thefts" continue to follow the onscreen guide.
Note: For information on determining the basis of your business or income-producing property, refer to IRS Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook.