Starting Your Business/Keeping Tax Records

What are Business Expenses

Casualty Losses

A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual.

• A sudden event is one that is swift, not gradual or progressive.
• An unexpected event is one that is ordinarily unanticipated and unintended.
• An unusual event is one that is not a day-to-day occurrence and that is not typical of the activity in which you were engaged.

Generally, you can deduct a casualty loss only in the tax year in which the casualty occurred. This is true even if you do not repair or replace the damaged property until a later year.

Business and income-producing property. Use Form 4684 to report your casualty gains and losses.

Important References

Publication 547                       Casualties, Disasters and Thefts
Form 4684                               Casualties and Thefts
Instruction for Form 4684
Form 4797                               Sales of Business Property
Instructions for Form 4797
Form 1040 Schedule A           Itemized Deductions
Form 1040 Schedule D           Capital Gains and Losses