Business, Legal & Accounting Glossary
n. in taxation, loss due to damage which qualifies for a casualty loss tax deduction. It must be caused by a sudden, unexpected or unusual occurrence such as a storm, flood, fire, shipwreck, earthquake or act of God, but would not include gradual damage from water seepage or erosion.
A casualty loss is a type of tax loss that is a sudden, unexpected, or unusual event. Damage or loss resulting from progressive deterioration of property through a steadily operating cause would not be a casualty loss. “Other casualty” are events similar to “fire, storm, or shipwreck.” It is generally held that wherever force is applied to property which the owner-taxpayer is either unaware of because of the hidden nature of such application or is powerless to act to prevent the same because of the suddenness thereof or some other disability and damage results.
In the United States, tax deductions are allowed for casualty losses under USC which allows deductions for losses sustained during the taxable year and not compensated for by insurance or otherwise. Such deductions are limited under to the amount personal casualty losses exceed personal casualty gains plus 10 per cent of the adjusted gross income of the individual within the taxable year. Additionally, under USC individual taxpayers are only allowed to include losses to the extent they exceed $100 for each casualty.
1. Loss must be “sustained” (a. Depends on taxpayer’s reasonable expectation of recovery from the wrongdoer,  b. should be resolved independently of any insurance consequences involved, and (2) taxpayer must not have been “compensated” for the loss
If a realized loss is not described below, an individual taxpayer cannot deduct the loss.
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This glossary post was last updated: 26th April, 2020 | 0 Views.