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Casualty & Theft Losses

What are Casualty & Theft Losses

Casualty and theft losses are the unexpected loss of property. Casualty and theft losses are deductible as an itemized deduction.


A casualty occurs when your property is damaged as the result of an identifiable event that is sudden, unexpected, and unusual.

  • A sudden event is swift, not gradual or progressive.
  • An unexpected event is unanticipated and unintended.
  • An unusual event is not a normal day-to-day occurrence and is not typical of the types of activities in which you engage.


A theft occurs when property is taken or removed with the intent to deprive you of it. A theft is not mislaid or lost property.

Amount of Loss

Amount regarded as a casualty loss is the difference between the market value of the property immediately before the casualty and its market value immediately afterwards. However, the loss may not exceed the adjustable basis of the property. Casualty and Theft losses of non-business property are deductible to the extent that each individual loss exceeds $100 and that the aggregate of these excess losses (excess over $100) exceeds 10% of AGI. The $100 floor applies to each separate casualty event.

Notify Insurer

A casualty loss for non-business property cannot be deducted unless

  • An insurance claim was filed, or
  • The losses are not covered by insurance.

The portion of the property not covered by insurance is eligible to be claimed for a deduction. The amount of insurance deductible you must pay to receive reimbursement is part of the total casualty or theft loss.

Lost, Misplaced, or Broken Property

No casualty loss deduction is allowed for lost, misplaced, or broken property.

Victims of Ponzi Schemes

If you were victim of a Ponzi Scheme (fraudulent scheme), IRS allows a theft loss deduction and a net operating loss carryback for losses from Ponzi investment schemes. The special tax treatment must be claimed on 4684 – Casualty & Theft, and is available only to qualified direct investors in a fraudulent scheme.

The deduction amount is equal up to 95% of the taxpayer’s lost investment, or 75% if the taxpayer is seeking recovery. The amount of the deduction is reduced by any withdrawals the taxpayer received from the investment, and by any recovered amounts.


4684 – Casualty & Theft
Publication 584 – Casualty & Theft

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