My son got a 23 Kona with 10K miles in 06/24. On 12/21/24, a drunk under insured driver totaled his car. Driver's insurance only paid $15K on $26K value. Casualty loss?

[homeoffice6350]

Fair market value for similar 2023 Kona model is $26K, the car was in great condition. Fred Loya insurance will only pay $15K replacement value, and their driver was arrested for DUI. My son wasn't even in the car, it was parked outside his apartment building. Now he is without a car, and $11K in the hole, on a casualty that was not his fault. Can he claim a casualty loss on the car and write it off?

[Vanessa A]

No.  Casualty losses are not deductible for personal  property or expenses.  The only way it would be deductible is if this car was used for business, not going to work as an employee, but as like a Door Dash driver or something else that he used the car for as a business. Then the loss would need to be deducted on Schedule C and prorated based on the business vs personal use. 

Deductible losses 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 (federal casualty loss)

[homeoffice6350]

With all due respect Vanessa A., I have to ask because another source sites using IRS Form 4684, Section A, for "thefts or casualties to non-business property." They even have an example citing specifics of fair market value, salvage yard offerings, and an Adjusted Gross Income deduction for the loss. You are saying absolutely, that only if the car is used as a ride-share\taxi\DoorDash, or was involved in a national disaster, that the loss be claimed?

HowStuffWorks states something else, and refers to Form 4684, Sect. A. Are they wrong? Or is there information I'm missing? Can I get a second opinion here please. Someone, anyone.

https://money.howstuffworks.com/personal-finance/personal-income-taxes/how-to-claim-casualty-loss-de...

[xmasbaby0]

When the tax laws changed for 2018 and beyond, casualty losses were eliminated as a deduction unless you are in a federally declared disaster area.   While very unfortunate, your son's  personal vehicle damage is not deductible as a casualty loss.   We hope your son is all right.

[Carl]

Your casualty loss is more than likely not deductible. See IRS Publication 547 at https://www.irs.gov/pub/irs-pdf/p547.pdf  page 2, section titled Limit on Personal Casualty & Theft Losses.