Casualty Loss

By | February 21, 2014

A taxpayer who suffered a loss of personal property due to a casualty or theft, may be able to deduct this loss as an itemized deduction on Schedule A. A casualty loss is defined as “the complete or partial destruction of property resulting from an identifiable event of a sudden, unexpected or unusual nature” (e.g., floods, storms, fires, auto accidents). Individuals may deduct a casualty loss only if the loss is incurred in a trade or business or in a transaction entered into for profit or arises from fire, storm, shipwreck, or other casualty or from theft. The taxpayer must consider certain limitations that will affect the amount that they are able to deduct on their tax returns for the casualty loss.