Casualty claim

[jacquieblue2]

The INCOME QUESTIONNAIRE asks "were you affected by a natural disaster", How do I answer if I had a  fire that was NOT a federally declared disaster but I'll be filing a 4684 casualty claim? Should I say "yes" here or will this question/issue be addressed elsewhere?

[macuser_22]

You answer NO since it is not a Federal proclaimed disaster.

See IRS topic:

https://www.irs.gov/taxtopics/tc515

But  see the 4684 instructions.   The Tx Cuts and Jobs Act (TCJA) eliminated the personal casualty loss deduction for non Federal disasters for 2017-2025.

Also See IRS topic:

https://www.irs.gov/taxtopics/tc515

https://www.irs.gov/pub/irs-pdf/i4684.pdf

Limitation on personal casualty and theft
losses. Personal casualty and theft losses of
an individual sustained in a tax year beginning
after 2017 are deductible only to the extent
they're attributable to a federally declared
disaster. The loss deduction is subject to the
$100 per casualty and 10% of your adjusted
gross income (AGI) limitations.
An exception to the rule above limiting the
personal casualty and theft loss deduction to
losses attributable to a federally declared
disaster applies if you have personal casualty
gains for the tax year. In this case, you will
reduce your personal casualty gains by any
casualty losses not attributable to a federally
declared disaster. Any excess gain is used to
reduce losses from a federally declared
disaster. The 10% AGI limitation is applied to
any remaining losses attributable to a federally
declared disaster.

[jacquieblue2]

Thank You for your answer. I have a copy of Publication 547 and for the sake of future viewers, please note the exception of having casualty gains. The wording is very confusing, (terribly worded publication) but a tax accountant explained it to me as follows. In my case the building's "replacement value" of $187,000. may not be used but the "Actual cash value" of $117,000. can be used as the basis, from which to subtract the amount paid by the insurance company. As long as the remaining balance to be claimed is more than 10% of your A.G.I. less $100. So I'm fairly confident about claiming the building itself, however I'm still a bit confused about some of the contents which were not covered by the insurance, such as 700 bales of hay and 6 saddles. The examples used in the publication sound as If the items would qualify however the lack of gains on these items leads me to believe otherwise. Any input?

[macuser_22]

See:

https://www.irs.gov/businesses/small-businesses-self-employed/involuntary-conversions-real-estate-ta...