Casualty Loss

Casualty Loss

Casualty Loss means:
a loss of property, due to fire, storm, shipwreck, theft, or other casualty, that is allowable, net of insurance reimbursement, as a deduction in computing taxable income. To qualify as a casualty loss, a loss must be due to a sudden, unexpected, or unusual event. A personal casualty loss, to be deductible, must exceed a $100 floor and 10% of Adjusted Gross Income. Former IRC (check if this IRC provision is current here) §165(c)(3).

In other words: Damage that results from a sudden or unusual event. After being reduced by $100, such personal losses are deductible to the extent that they exceed 10% of his or her adjusted gross income.

Casualty Loss and California Tax

For more information about taxes in California, click here.

A casualty occurs when property is damaged as a result of a disaster such as a hurricane, fire, car accident or similar event. Generally, the taxpayer may deduct a casualty loss only in the tax year in which the loss occurred. However, if the taxpayer have a casualty loss from a disaster that occurred in an area declared by the President or the Governor as a disaster area, the loss may be claimed for the year in which the disaster occurred, or the year immediately before the loss.


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