Publication 547 |
2001 Tax Year |
Casualty
A casualty is the damage, destruction, or loss of property
resulting from an identifiable event that is sudden, unexpected, or
unusual.
- A sudden event is one that is swift, not gradual
or progressive.
- An unexpected event is one that is ordinarily
unanticipated and unintended.
- An unusual event is one that is not a day-to-day
occurrence and that is not typical of the activity in which you were
engaged.
Deductible losses.
Deductible casualty losses can result from a number of different
causes, including the following.
- Car accidents
(but see Nondeductible losses,
next, for exceptions).
- Earthquakes.
- Fires (but see Nondeductible losses, next, for
exceptions).
- Floods.
- Government-ordered demolition or relocation of a home that
is unsafe to use because of a disaster as discussed under
Disaster Area Losses, later.
- Hurricanes.
- Mine cave-ins.
- Shipwrecks.
- Sonic booms.
- Storms.
- Tornadoes.
- Vandalism.
- Volcanic eruptions.
Nondeductible losses.
A casualty loss is not deductible if the damage or destruction is
caused by the following.
- Accidentally breaking articles such as glassware or china
under normal conditions.
- A family pet.
- A fire if you willfully set it, or pay someone else to set
it.
- 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.
- Progressive deterioration (explained next).
Progressive deterioration.
Loss of property due to progressive deterioration is not deductible
as a casualty loss. This is because the damage results from a steadily
operating cause or a normal process, rather than from a sudden event.
The following are examples of damage due to progressive deterioration.
- The steady weakening of a building due to normal wind and
weather conditions.
- The deterioration and damage to a water heater that bursts.
But the rust and water damage to rugs and drapes caused by
the bursting of a water heater does qualify as a casualty.
- Most losses of property caused by droughts. To be
deductible, a drought-related loss generally must be incurred in a
trade or business or in a transaction entered into for profit.
- Termite or moth damage.
- The damage or destruction of trees, shrubs, or other plants
by a fungus, disease, insects, worms, or similar pests. But,
a sudden destruction due to an unexpected or unusual infestation
of beetles or other insects may result in a casualty loss.
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