Casualty and Theft Loss – IRS Form 4684

Your vehicle was hit by hail and the insurance company agreed to compensate you $4,600 AND allow you to keep the vehicle AND not issue you a salvage title.  In most situations this is non reportable.  However not always.  This may be reportable on IRS Form 4684 Casualty and Theft and quite possible on Schedule D as a Capital Gain if you are reimbursed by an insurance company an amount greater than your cost basis in the vehicle as in this example.

  1. Cost of Vehicle $15,000
  2. FMV before accident  $6,000
  3. FMV after accident $4,000
  4. Decrease in FMV (line 2 −line 3) $2,000
  5. Loss (smaller of line 1 or line 4) $2,000
  6. Subtract insurance reimbursement. $4,600
  7. Gain after reimbursement  $2,600 reported on Schedule D
Or it may be reportable on IRS form 4864 as in this example, presuming you itemize your deductions on Schedule A.
  1. Cost of Vehicle $15,000
  2. FMV before accident  $6,000
  3. FMV after accident $1,000
  4. Decrease in FMV (line 2 −line 3) $5,000
  5. Loss (smaller of line 1 or line 4) $5,000
  6. Subtract insurance reimbursement. $4,600
  7. Loss after reimbursement  $400
  8. Subtract $100
  9. Loss after $100 rule $300
  10. Subtract 10% of whatever your Adjusted Gross Income (AGI) is (for this example say AGI = $2,000)
  11. Casualty loss deduction $100
Or it may be non reportable altogether as in this example.
  1. Cost of Vehicle $15,000
  2. FMV before accident  $6,000
  3. FMV after accident $1,000
  4. Decrease in FMV (line 2 −line 3) $5,000
  5. Loss (smaller of line 1 or line 4) $5,000
  6. Subtract insurance reimbursement. $4,600
  7. Loss after reimbursement  $400
  8. Subtract $100
  9. Loss after $100 rule $300
  10. Subtract 10% of whatever your Adjusted Gross Income (AGI) is (for this example say AGI = $50,000)
  11. Casualty loss deduction $0
For more info check out IRS Publication 547 and the instructions for IRS Form 4684

John R. Dundon, EA [720-234-1177, John@JohnRDundon.com]. John is a lifelong student of the US Tax Code; enrolled with the United States Treasury Department to practice before the IRS (Enrolled Agent # 00085353); under contract with the IRS as a Certified Individual Taxpayer Identification Number (ITIN) Acceptance Agent; regulated under USC 31 Section 330 & USC 26 Section 7525a.3.A; governed under US Treasury Cir. 230.

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Posted in Casualty Loss, Theft Loss

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