Fire caused loss of vehicles and buildings. Income from insurance payment? Vehicles not covered by insurance, loss?

[yokeville]

Loss of buildings and vehicles in fire 2016. Buildings covered by insurance co but not any of the vehicles. Is the reimbursement from insurance co income? Can we deduct the loss of the vehicles?

Thank you much for your time

[MiriamF · Accepted solution]

You can take a deduction for the loss of vehicles and buildings due to a catastrophe, but only to the extent that the loss exceeds insurance reimbursement.

To determine whether insurance exceeds the value of your loss, you would begin with the amount you paid for the asset plus any improvements you made, minus any depreciation you claimed.

If the vehicles were used for business - if you were self-employed, for instance - then the portion used for business is directly deductible from you business income. The expense is recorded as the "sale" of an asset, in which the sale price is $0 or the salvage value, whichever is higher.

If they were personal vehicles, the loss is reported on Schedule A. In TurboTax Online, you would report it under Other Deductions and Credits/Casualties and Thefts. In order to get credit for this loss, your itemizable expenses would have to exceed the standard deduction. When you report these losses, you first deduct $100 for each event (the fire would count as one event) and then subtract 10% of AGI to get the deductible value of your loss. TurboTax will do all this for your; just answer the interview questions.