In 2015 I rented my car to film. It was damaged. I received $8k settlement. I still had to pay $5k on top for repairs. Is the $8k considered income? The $5k a loss?

[tripwater]

I claimed the income for the car rental in 2015.  2016 was the lawyers and dealing with the settlement. An entire year of time without car.

I had to hire a lawyer and we settled for an amount that after lawyer fees, I ended up with a $8k check that I handed over to the repair shop. It is currently being worked on and I will owe another $5k for the repairs to get my classic car back to the state it was before the production company got a hold of it. In my mind this is a loss. But I want to be sure that the IRS does not consider the $8k income nor consider the $5k I am adding to it, excessive and a personal choice. See, the whole point of getting a lawyer was the insurance for the production company wanted to take a show car and put it through a standard collision center repair like Maaco for cheap. They had no distinction between a daily driver and a show car and the skill involved in restoration and cost of finding parts. So I reserve room for the possibility that the IRS could do the same and deem the $5k I am putting into the car, not a loss, when in fact it is ( to me ). It is a requirement to get the car back to its original state.

Thank you for your time.

[IreneS · Accepted solution]

UPDATED FOR TAX YEAR 2019

For tax years 2018 through 2025, if you are an individual, casualty losses of personal-use property are deductible only if the loss is attributable to a federally declared disaster.

For more information see IRS Publication 547 - Casualties, Disasters, and Thefts.

[Edited | 4/2/2020 |  12:51pm PDT]

[tripwater]

IS the $8k from the settlement income and taxable? Or considered part of the loss?

[tripwater]

Nevermind I see where you address that in step 7. Thank you.