Taxation Summary

Taxation I

Publication 547

Summary of Figuring a Loss

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.

* Deductible losses.

Deductible casualty losses can result from a number of different causes, including car accidents, earthquakes, fires, floods, government-ordered demolition, mine cave-ins, shipwrecks, sonic booms, storms, terrorist attacks, vandalism, and volcanic eruptions.

* Nondeductible losses.

A casualty loss is not deductible if the damage or destruction is caused by accidentally breaking articles, a family pet, an intended fire and car accident, and progressive deterioration.

Loss of property damaged by a family pet is not deductible unless the requirements discussed earlier under casualty are met. Loss of property due to progressive deterioration is not deductible as a casualty loss. This is because the damage results from a steadily operating cause or a normal process, rather than from a sudden event.

Under a special procedure, you can deduct the amounts you paid to repair damage to your home and household appliances due to corrosive drywall. Corrosive drywall means drywall that is identified as problem drywall under the two-step identification method published by the Consumer Product Safety Commission (CPSC) and the Department of Housing and Urban Development (HUD) in their interim guidance dated January 28, 2010, as revised by the CPSC and HUD.