Casualty Loss


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Casualty loss

A financial loss caused by damage, destruction, or loss of property as a result of an unexpected or unusual event.

Casualty Loss

A loss that occurs as a result of an unforeseen, catastrophic event. Casualty losses can occur, for example, when one drives a car through the garage or when a tornado destroys a business. Financial losses from gradual, environmental degradation would not qualify as casualty losses. One may deduct a casualty loss from one's taxable income, subject to certain conditions. Specifically, the first $100 of a casualty loss is not deductible and one must reduce the amount of the deduction by 10% of one's adjusted gross income. For example, if one suffers a casualty loss of $25,000 and has an adjusted gross income of $100,000, the casualty loss deduction is calculated thusly:

Casualty loss = 25,000 - 100 - (0.10 * 100,000) = $14,900.

Casualty Loss

A casualty is the complete or partial destruction of property resulting from an identifiable event of a sudden, unexpected, or unusual nature. Examples are floods, storms, fires, earthquakes, and auto accidents. Individuals may deduct a casualty loss only if the loss is incurred in a trade or business, in a transaction entered into for profit, or is a personal loss arising from a disaster such as those mentioned above. Individuals deduct personal casualty losses as itemized deductions on Schedule A, subject to a $100 nondeductible amount and a reduction of the loss by 10 percent of the taxpayer's AGI.
References in periodicals archive ?
Saving items such as police reports, newspaper articles, photographs or videos, bills of sale, receipts for improvements or repairs, payment checks, deeds, professional appraisals, and copies of insurance claims or appraisals will help you to support any casualty loss deduction you take on your return.
For example, calendar-year taxpayers will ordinarily have until April 15, 2006 to amend their 2004 returns to claim a casualty loss that occurred in 2005.
Defining and proving casualty loss * Tax issues on claims in Presidentially-declared disaster areas * Compiling a home inventory check list * Replacing lost identification and documents and much more.
In the event their company suffers a property or casualty loss, CPAs should immediately activate an investigation team to begin preserving critical evidence.
Thus, P is entitled to a casualty loss in the amount of $27,920.
3 million increase in casualty loss recoveries related to the September 2004 and January 2005 Ohio River floods.
This prompted them to claim a $751,247 casualty loss on their 1994 tax return.
Jackson Hewitt(R) Offers Taxpayers in Presidentially-Declared Disaster Areas Important Casualty Loss Information
If a taxpayer sustains a casualty loss in a presidentially declared disaster area, IRC section 165(h) allows a taxpayer to treat the loss as having occurred in the taxable year immediately preceding the taxable year in which the disaster actually occurred.
Tax Preparation Company Assists in Locating Prior-Year Tax Returns, Providing Casualty Loss Information and Providing Connectivity for Taxpayers to Contact Their Insurers and Apply for FEMA Aid
The unwary taxpayer can still take mortgage interest, property tax and casualty loss deductions related to the home office, but cannot deduct additional expenses connected to the rental income, including business expenses, depreciation and business casualty losses.
Best believes The Pool's earnings are exposed to claims development related to asbestos and environmental (A&E), assumed reinsurance (in run-off since 2003) and prior accident year casualty loss reserves.