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My apartment and all contents were destroyed in a file. How do I determine a cost basis for the lost personal property?

Forum|Forum|7 years ago
June 4, 2019
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My apartment was destroyed on Christmas morning along with all the personal property of myself and my three daughters. How do I determine a cost basis to use the casualty deduction?

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Best answer by MinhT1

Up to tax year 2017. your loss would qualify as a casualty and theft loss and would be deductible as an itemized deduction.

However, the tax treatment of personal casualty losses and thefts is changed under the Tax Cuts and Jobs Act. Pursuant to the new law, the itemized deduction for personal casualty and theft losses is temporarily limited in tax years 2018 through 2025 solely to losses attributable to federally-declared disasters.

Therefore, your loss is not deductible.

M

MinhT1Answer

Up to tax year 2017. your loss would qualify as a casualty and theft loss and would be deductible as an itemized deduction.

However, the tax treatment of personal casualty losses and thefts is changed under the Tax Cuts and Jobs Act. Pursuant to the new law, the itemized deduction for personal casualty and theft losses is temporarily limited in tax years 2018 through 2025 solely to losses attributable to federally-declared disasters.

Therefore, your loss is not deductible.

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T

TerryA

Employee

Some states do not conform to the new federal rules that TTMinh mentions so for state purposes such non-FEMA losses can still be entered as "This event does not qualify as a disaster casualty". This loss will be ignored by the federal program unless there is also a casualty gain in the return whereupon the non-FEMA loss will offset the gain. A nonconforming TT/State program will pick up the loss.

My list of the nonconforming states is AL, AR, CA, HI, IA, MN, MO, and NY. So if you are going to prepare one of those state returns then it could benefit you to enter it into the federal program.