Casualty Loss
Also found in: Legal.
Casualty loss
A financial loss caused by damage, destruction, or loss of property as a result of an unexpected or unusual event.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
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 = 25,000 - 100 - (0.10 * 100,000) = $14,900.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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.
Copyright © 2008 H&R Block. All Rights Reserved. Reproduced with permission from H&R Block Glossary