Tax Guide |
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If you have a loss to personal-use property, you must fill out Section A of Form 4684, Casualties and Thefts. Each item is reported in a separate column on this form (if a large number of items were lost or damaged, you can use reasonable categories such as "clothing," "jewelry," "furniture," etc.).
Separate copies of Form 4684 must be used if you suffered more than one casualty during the year; but use only one Form 4684 for lines 13 through 18. Ultimately, you will transfer the loss amount to Schedule A as an itemized casualty loss deduction.
If you have a taxable gain as a result of a casualty to personal-use property, transfer the gain amount to Schedule D, Capital Gains and Losses, on your individual income tax return (Form 1040). The gain will be treated as short-term or long-term, depending on whether you held the property for one year or less, or for more than one year.
If you elect to defer gain by purchasing qualified replacement property, you won't have to transfer the gain to Schedule D, but you must attach a statement to your tax return explaining the date and details of the casualty or theft, the amount of insurance or other reimbursement, how you figured the gain, and that you are choosing to postpone gain by purchasing replacement property.
If you've already done the replacing, include information about the property, the postponed gain, the basis adjustment that reflects the postponed gain, and any remaining (unpostponed gain) you are reporting on Schedule D. If you make the replacement in a later year, attach a statement including this information about the replacement property to the tax return for that later year. If you expected to replace property but then didn't, or replaced at less than the full amount, you'll have to go back and amend your tax return for the year you claimed the loss.
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