Personal Casualty Gains for individuals for

United States Federal Income Tax Income taxes in the United States are imposed by the federal government, and most states. The income taxes are determined by applying a tax rate, which may increase as income increases, to taxable income, which is the total income less allowa ...

purposes are defined in sectio
26 U.S.C. § 165(h)(3)(A)
of the

Internal Revenue Code The Internal Revenue Code (IRC), formally the Internal Revenue Code of 1986, is the domestic portion of federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 ...

as the recognized gain of property arising from fire, storm, shipwreck, or other casualty. The property in question cannot be connected with a trade, business, or transaction entered into for profit. See .

Eligibility

Along with persons filing as individuals, a married couple making a joint return for the taxable year are treated as one individual. See

Tax Consequences

Net personal casualty gains are taxed as gains from sales or exchanges of capital assets. See .{{USC, 26, 165(h)(2)(B)

Determination

Net personal casualty gains are the excess of a taxpayer's personal casualty gains over personal casualty losses in a given taxable year.

Examples

#A taxpayer’s insured home is destroyed by an accidental fire. Prior to its destruction, the home was valued at its adjusted basis of $100,000 and insured at $130,000. After receiving insurance proceeds, the taxpayer will have a personal casualty gain of $130,000 and a personal casualty loss of $100,000 for a net personal casualty gain of $30,000. #A taxpayer owns a vacant lot covered with rocks. The lot has a fair market value of $30,000, but were the rocks not there, it would be worth $35,000. Late at night, a thief removes the rocks. The fair market value increases to $35,000. The taxpayer has a personal casualty gain of $5,000. United States federal income tax