Yes, 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.
If
you lease property from someone else, you can deduct a loss on the
property in the year your liability for the loss is determined. This is
true even if the loss occurred or the liability was paid in a different
year. You aren't entitled to a deduction until your liability under the
lease can be determined with reasonable accuracy. Your liability can be
determined when a claim for recovery is settled, adjudicated, or
abandoned.
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