Userid: CPM Schema: instrx Leadpct: 95% Pt. size: 8 Draft Ok to Print AH XSL/XML Fileid: … ions/I4684/2020/A/XML/Cycle07/source (Init. & Date) _______ Page 1 of 8 14:19 - 3-Feb-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Department of the Treasury 2020 Internal Revenue Service Instructions for Form 4684 Casualties and Thefts (Rev. February 2021) Section references are to the Internal Revenue Code deduction now makes it advantageous for you Instructions for Form 8949. For additional unless otherwise noted. to itemize. It is advantageous to itemize if the information, see Opportunity Zones Frequently total of the casualty loss deduction and any Asked Questions. other itemized deductions is more than your General Instructions standard deduction (and increased standard Deferral of gain invested in a QOF. If you deduction amount, if applicable). If you itemize, realize a gain from an actual, or deemed, sale Future Developments attach Schedule A (Form 1040) or Schedule A or exchange with an unrelated person and during the 180-day period beginning on the For the latest information about developments (Form 1040-NR), and Form 4684 to your date realizing the gain, invested an amount of related to Form 4684 and its instructions, such amended return. Fill out Form 1040-X to the gain in a QOF, you may be able to elect to as legislation enacted after they were refigure your tax to find your refund. temporarily defer part or all of the gain that published, go to IRS.gov/Form4684. Form 1040-X, Amended U.S. Individual In- would otherwise be included in income. If you come Tax Return. The IRS has started to make the election, the gain is included in What’s New accept electronically filed Forms 1040-X. taxable income only to the extent, if any, that Currently, only tax year 2019 Forms 1040 and the amount of realized gain exceeds the Personal-use property. A new entry space 1040-SR can be amended electronically. aggregate amount invested in a QOF during the has been added to the form for taxpayers who Additional improvements are planned for the 180-day period beginning on the date the gain are reporting a casualty or theft loss attributable future. You can still file a paper Form 1040-X was realized. to a federally declared disaster. For more and should follow the instructions for preparing information, see FEMA disaster declaration and submitting the paper form. For more How to report. Report the gain as it would numbers, later. information, see IRS.gov/Form1040X. otherwise be reported if you were not making the election. Report the election for the amount Special rules and return procedures expan- Limitation on personal casualty and theft invested in a QOF on Form 8949. See Form ded for claiming qualified disaster-related losses. Personal casualty and theft losses of 8949 for how to make the election. You will personal casualty losses. The Taxpayer an individual sustained in a tax year beginning need to attach Form 8997 annually until you Certainty and Disaster Tax Relief Act of 2019, after 2017 are deductible only to the extent dispose of the QOF investment. See the Form and the Taxpayer Certainty and Disaster Tax they're attributable to a federally declared 8997 instructions for more information. Relief Act of 2020 expanded the special rules disaster. Personal casualty and theft losses and return procedures for personal casualty attributable to a federally declared disaster are losses attributable to certain major federal subject to the $500 per casualty limitation. Purpose of Form disasters that were declared in 2018, 2019, and Use Form 4684 to report gains and losses from 2020. An exception to the rule above limiting the personal casualty and theft loss deduction to casualties and thefts. Attach Form 4684 to your Personal casualty losses sustained in tax losses attributable to a federally declared tax return. year 2020 as a result of qualified disaster disaster applies if you have personal casualty losses, may be claimed on Form 4684. See gains for the tax year. In this case, you will Definitions Qualified disaster loss, later, for more reduce your personal casualty gains by any Three types of casualty losses are described in information. casualty losses not attributable to a federally these instructions. declared disaster. Any excess gain is used to Qualified disaster loss. A qualified disaster 1. Federal Casualty Losses. loss is now expanded to include an individual's reduce losses from a federally declared casualty and theft of personal-use property that disaster. 2. Disaster Losses. is attributable to a major disaster that was For more information, see Disaster Losses, 3. Qualified Disaster Losses. declared before February 26, 2021, by the later, the instructions for Line 14, and Pub. 547. President under section 401 of the Stafford Act All three types of losses refer to federally and that occurred on or after December 28, AMT adjustment for standard deduction declared disasters, but the requirements for 2019, and on or before December 27, 2020, made retroactively inapplicable to net each loss vary. A federally declared disaster is and continued no later than January 26, 2021. qualified disaster losses. The AMT a disaster determined by the President of the However, this change does not include those adjustment for the standard deduction doesn't United States to warrant assistance by the losses attributable to a major disaster that has apply to the increase in the standard deduction federal government under the Robert T. been declared only by reason of COVID-19. that is attributable to a net disaster loss. See Stafford Disaster Relief and Emergency Taxpayers who also file the 2020 Form 6251, Assistance Act (Stafford Act). A federally Alternative Minimum Tax for Individuals, later, declared disaster includes (a) a major disaster Reminders for more information. declaration, or (b) an emergency declaration under the Stafford Act. See the 2018 Form 4684 and its Electing large partnership rules repealed. TIP instructions for the special rules Rules relating to electing large partnerships Federal casualty loss. A federal casualty loss regarding your 2018 return. You may have been repealed. References to electing is an individual’s casualty or theft loss of have to file an amended return on Form 1040-X large partnerships have been revised personal-use property that is attributable to a to claim these benefits on your 2018 return. accordingly on Form 4684 and in these federally declared disaster. The casualty loss Form 1040-X is available at IRS.gov/ instructions. See Section B—Business and must occur in a state receiving a federal Form1040X. The 2018 Form 4684 is available Income-Producing Property, later. disaster declaration. If you suffered a federal at IRS.gov/Form4684. casualty loss, you are eligible to claim a Special rules for capital gains invested in casualty loss deduction. If you suffered a How to report the loss on Form 1040-X. You qualified opportunity funds (QOFs). If you casualty or theft loss of personal-use property should adjust your deductions on Form 1040-X. have a capital gain for 2020, you can invest that that was not attributable to a federally declared The Instructions for Form 1040-X show how to gain into a qualified opportunity fund and elect disaster, it is not a federal casualty loss, and do this. Explain the reasons for your adjustment to defer part or all of the gain that you would you may not claim a casualty loss deduction and attach Form 4684 to show how you figured otherwise include in income until December 31, unless the exception applies. See the Caution your loss. See Figuring a Loss in Pub. 547. 2026. You may also be able to permanently under Losses You Can Deduct, later. exclude gain from the sale or exchange of an If the damaged or destroyed property was investment in a QOF if the investment is held for Disaster loss. A disaster loss is a loss that is nonbusiness property and you didn’t itemize at least 10 years. For information about how to attributable to a federally declared disaster and your deductions on your original return, you elect to use these special rules, see the that occurs in an area eligible for assistance must first determine whether the casualty loss Feb 03, 2021 Cat. No. 12998Z Page 2 of 8 Fileid: … ions/I4684/2020/A/XML/Cycle07/source 14:19 - 3-Feb-2021 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. pursuant to the Presidential declaration. The claim, you can't deduct the full unrecovered property. If the cost of the replacement property disaster loss must occur in a county eligible for amount as a casualty or theft loss and only the is less than the reimbursement received, you public or individual assistance (or both). part of the loss that isn't covered by your must recognize the gain to the extent the Disaster losses are not limited to individual insurance policy is deductible. reimbursement exceeds the cost of the personal-use property and may be claimed for replacement property. individual business or income-producing Related expenses. The related expenses you property and by corporations, S corporations, have due to a casualty or theft, such as If the replacement property or stock is and partnerships. If you suffered a disaster loss, expenses for the treatment of personal injuries acquired from a related person, gain generally you are eligible to claim a casualty loss or for the rental of a car, aren't deductible as can't be postponed by: deduction and to elect to claim the loss in the casualty or theft losses.