Tuesday, May 1, 2018




The 2017 federal tax law reforms include several cases where the normal reduction of a Form 4684 Casualty loss receives a special benefit.


Usually when computing a casualty loss, there are two limitations. The first is for each casualty loss claimed in a year there is a $100 reduction. In addition, total losses are reduced by 10% of Adjusted Gross Income. That last one can be quite a haircut.


With all the huge losses that occurred in 2017, Congress granted several waivers. One affected the three hurricanes, Harvey, Irma and Maria. Then in the major TAX law passed at the end of the year, all federal disasters in the last three months were included in the waiver.


For affected disasters the $100 limitation was actually increased to $500; while the 10% Adjusted Gross Income reduction was completely waived.


Sounds great and it is.


But there is more…


States do not necessarily follow.

My primary practice area is in California.

Back in 2008-2009 Congress granted a similar waiver.


AS in 2008-2009, for the 2017 disasters, California does not conform to the federal legislation.


So, while you get the waiver on your federal return, the California Form 4684 will still be based on the $100 and 10% Adjusted Gross Income reductions.




JOHN TRAPANI, CPA assists both taxpayers directly and

advises taxpayers’ tax professionals.


This material was contributed by John Trapani. A Certified Public Accountant who has assisted taxpayers since 1976, in analyzing and reporting transactions of the type covered in this material.  

© 2018, John Trapani, CPA,

All rights to reproduce or quoting any part of the entry in any other publication is reserved by the author. Republication rights limited by the author regarding this material.


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The contents in this blog entry represent only the understanding of the author.
Any accounting, business or tax advice contained in this entry is of a general nature and does not have any legal weight, it should not be considered an authoritative analysis of a specific issue no matter how much it seems to be “on point.” Nor should it be a substitute for a formal analysis of a specific fact situation. It cannot be considered sufficient to avoid tax-related penalties that might be assessed by a tax authority.
If desired, John Trapani, CPA  would be pleased to perform complete research and analysis of a taxpayer’s situation.

This material was completed on the date of the posting









Wednesday, January 17, 2018

Special Rules for 2017 Personal Hurricane Disaster Losses

Special Rules for 2017 Personal Hurricane Disaster Losses

If you previously downloaded the 2016 Form 4684 or the Instructions for Form 4684, please note the following changes.

The Disaster Tax Relief and Airport and Airway Extension Act of 2017 includes favorable rules for many personal casualty losses from Hurricanes Harvey, Irma, and Maria. Under the Act, you can deduct these losses whether you itemize other deductions on Schedule A or not. Moreover, your net casualty loss from these hurricanes does not need to exceed 10% of your adjusted gross income to qualify for the deduction. However, the $100 threshold limit per casualty is increased to $500.

You may be able to take many personal casualty losses from Hurricane Harvey, Irma, or Maria into account on your 2016 tax return instead of your 2017 tax return. Generally, you can elect to deduct a loss from a federally declared disaster in the tax year immediately before the tax year in which the loss was sustained by claiming your disaster loss on your original or amended return for the earlier year no later than 6 months after the due date for filing your original return (without extensions) for the year of the disaster. You can make the election to deduct these losses on your amended 2016 return on or before October 15, 2018. If you previously got a 6-month extension of time to file your original 2016 return and you are an affected taxpayer for purposes of Hurricanes Harvey, Irma, or Maria, you have until January 31, 2018 to timely file and make this election. See IRS.gov DisasterTaxRelief for more information on which taxpayers have been granted additional time to file through Jan. 31, 2018.  For more information on disaster assistance and emergency relief for individuals, see IRS.gov/DisasterRelief. 

The 2016 Form 4684 and Instructions for Form 4684 are now posted at IRS.gov/Form4684. They have been updated to include calculations and other information specific to losses from Hurricanes Harvey, Irma, and Maria.