Question

• What occurrences do not result in deductible casualty losses according to the IRS in addition to those listed in the text?
• What occurrences do not result in deductible theft losses according to the IRS in addition to those listed in the text?
• At the same time it is explaining the occurrences that do not result in deductible casualty or theft losses, the IRS states that deductible losses can result from two specific occurrences that would seem to fall into the “nondeductible” category. Briefly describe these provisions.

What do publication do I need to cite

Answer 1

1) Occurrences do not result in deductible casualty losses:

A casualty loss is not deductible, even to the extent the loss doesn’t exceed your personal casualty gains, if the damage or destruction is caused by the following.

1. Accidentally breaking articles such as glassware or china under normal conditions.
2. A family pet.
3. A fire if you willfully set it, or pay someone else to set it.
4. A car accident if your willful negligence or willful act caused it. The same is true if the willful act or willful negligence of someone acting for you caused the accident.
5. Progressive deterioration.

2) Occurrences do not result in deductible theft losses :

a. Decline in market value of stock.

You can’t deduct as a theft loss the decline in market value of stock acquired on the open market for investment if the decline is caused by disclosure of accounting fraud or other illegal misconduct by the officers or directors of the corporation that issued the stock.

b. Mislaid or lost property.

The simple disappearance of money or property isn’t a theft.