casualty loss

Forum|Forum|5 years ago
September 11, 2020
1 reply
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Would a flood caused by rainstorm runoff be classified as a deductible casualty loss if it was due to a prior fire which was federally declared disaster a couple of months before the flood.

Lacerte Tax

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George4Tacks

Level 15

IRS Pub 547

Single event.

Generally, events closely related in origin cause a single casualty. It is a single casualty when the damage is from two or more closely related causes, such as wind and flood damage caused by the same storm. A single casualty may also damage two or more pieces of property, such as a tornado that damages both your home and your car parked in your driveway.

Example 1.

A tornado destroyed your pleasure boat. You also lost some boating equipment in the storm. Your loss was $5,000 on the boat and $1,200 on the equipment. Your insurance company reimbursed you $4,500 for the damage to your boat. You had no insurance coverage on the equipment. Your casualty loss is from a single event and the $100 rule applies once. Figure your loss before applying the 10% rule (discussed later) as follows.

		Boat	Equipment
1.	Loss	$5,000	$1,200
2.	Subtract insurance	4,500	-0-
3.	Loss after reimbursement	$ 500	$1,200
4.	Total loss	$1,700
5.	Subtract $100	100
6.	Loss before 10% rule	$1,600

Example 2.

Thieves broke into your home in January and stole a ring and a fur coat. You had a loss of $200 on the ring and $700 on the coat. This is a single theft. The $100 rule applies to the total $900 loss.

Example 3.

In October, hurricane winds blew the roof off your home. Flood waters caused by the hurricane further damaged your home and destroyed your furniture and personal car. This is considered a single casualty. The $100 rule is applied to your total loss from the flood waters and the wind.

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Also see https://www.irs.gov/newsroom/irs-announces-tax-relief-for-oregon-victims-of-severe-storms-flooding-landslides-and-mudslides or search for your specific disaster area

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