Casualty and Theft Losses and Form 4684: Claiming Losses from Scams, Casualties, and Disasters

Although the Tax Act of 2017 eliminated personal casualty loss deductions for the years 2018-2025, business casualty losses remain deductible, and personal losses within federally declared disaster areas are deductible. The Federal Disaster Relief Act of 2023 provides relief to individual taxpayers in federally declared disaster areas. The Act allows these taxpayers to deduct qualifying personal casualty losses even when they do not itemize. It also eliminates the $100 floor for deductible losses.

Tax practitioners continue to struggle with the calculations of the deductible portion of losses from these life-altering events. Insurance proceeds, settlements, and other relief received rightly alter the deductibility of losses. Calculating depreciation and the basis of the replacement property and preparing Form 4684 provide additional challenges as well.

Listen as Lawrence K.Y. Pon, CPA/PFS, CFP, EA, USTCP, AEP at Pon & Associates, explains eligibility for this deduction, calculating deductible losses, and timing the deduction of these benefits. Tax advisers need to recognize disaster relief available for taxpayers suffering from major disasters and grasp existing rules for the deductibility of these losses to obtain maximum tax savings for individuals and businesses.

• Casualty losses
  • Personal
  • Business
• Timing the loss deduction
• Calculating the loss and deduction
• Section 1033 involuntary conversions
• Insurance proceeds, settlements, other relief payments
• Depreciation of replacement property
• Federal disaster relief
• COVID-19 and disaster relief
• Preparing Form 4684

The panelist will review these and other critical issues:

• Properly preparing Form 4684, Casualties and Thefts
• IRS relief for taxpayers impacted by the California wildfires and other disasters
• Relief available under the Federal Disaster Relief Act of 2023
• Pending disaster relief legislation
• The impact of insurance reimbursements and settlements loss deductions

Learning Objectives

After completing this course, you will be able to:

• Identify specific areas eligible for federal disaster relief
• Determine deductible casualty loss amounts under specific scenarios
• Ascertain which taxpayers may qualify for Hurricanes Helene and Milton relief
• Decide which year to deduct certain casualty losses

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of individual income taxation, including itemized deductions, individual income tax credits, net operating loss limitations including carrybacks and carryforwards.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).