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Publication 17

When To Report Gains and Losses(p176)



If you receive an insurance or other reimbursement that is more than your adjusted basis in the destroyed or stolen property, you have a gain from the casualty or theft. You must include this gain in your income in the year you receive the reimbursement, unless you choose to postpone reporting the gain as explained in Pub. 547.

Table 25-2.  When To Deduct a Loss

IF you have a loss... THEN deduct it in the year...
from a casualtythe loss occurred.
in a federally declared disaster areathe loss was sustained or the year immediately before the loss was sustained.
from a theft the theft was discovered.
on a deposit treated as a: 
• casualty or any ordinary lossa reasonable estimate can be made.
• bad debtdeposits are totally worthless.


Generally, you can deduct a casualty loss that isn't reimbursable only in the tax year in which the casualty occurred. This is true even if you don't repair or replace the damaged property until a later year.
You can deduct theft losses that aren't reimbursable only in the year you discover your property was stolen.
If you aren't sure whether part of your casualty or theft loss will be reimbursed, don't deduct that part until the tax year when you become reasonably certain that it won't be reimbursed.
If you have a loss, see Table 25-2.

Loss on deposits.(p176)

If your loss is a loss on deposits in an insolvent or bankrupt financial institution, see Loss on Deposits, earlier.

Disaster Area Loss(p177)

You generally must deduct a casualty loss in the year it occurred. However, if you have a casualty loss from a federally declared disaster that occurred in an area warranting public or individual assistance (or both), you can choose to deduct the loss on your tax return or amended return for either of the following years.
You must make the choice to take your casualty loss for the disaster in the preceding year on or before the date that is six months after the regular due date for filing your original return (without extensions) for the disaster year.
If you claimed a deduction for a disaster loss in the disaster year and you wish to deduct the loss in the preceding year, you must file an amended return to remove the previously deducted loss on or before you file the return or amended return for the preceding year that includes the disaster loss deduction.


Special rules apply if you choose to postpone reporting gain on property damaged or destroyed in a federally declared disaster area. For those special rules, see Pub. 547.

Postponed tax deadlines.(p177)

The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared disaster. The tax deadlines the IRS may postpone include those for filing income and employment tax returns, paying income and employment taxes, and making contributions to a traditional IRA or Roth IRA.
If any tax deadline is postponed, the IRS will publicize the postponement in your area by publishing a news release, revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). Go to to find out if a tax deadline has been postponed for your area.
Who is eligible.(p177)
If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement.
Covered disaster area.(p177)
This is an area of a federally declared disaster in which the IRS has decided to postpone tax deadlines for up to 1 year.

Abatement of interest and penalties.(p177)

The IRS may abate the interest and penalties on underpaid income tax for the length of any postponement of tax deadlines.

More information.(p177)

For more information, see Disaster Area Losses in Pub. 547.