U.S. Individual Income Tax Return

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Instructions for Form 4684

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11:51 - 12-JAN-2009

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2008

Department of the Treasury
Internal Revenue Service

Instructions for Form 4684
Casualties and Thefts
Section references are to the Internal
Revenue Code unless otherwise noted.

flooding occurred in the Midwestern disaster
areas.

General Instructions

Federally declared disasters. New rules
apply to losses of personal use property
attributable to federally declared disasters
declared in tax years beginning after 2007
and that occurred before 2010. A federally
declared disaster is any disaster determined
by the President of the United States to
warrant assistance by the Federal
Government under the Robert T. Stafford
Disaster Relief and Emergency Assistance
Act. A disaster area is the area determined
to warrant such assistance. The new rules
discussed here do not apply to losses in the
Midwestern disaster areas.

What’s New
Kansas and Midwestern disaster areas.
Losses of personal use property that arose
in the Kansas or Midwestern disaster areas
(defined below) are not subject to the $100
or 10% of adjusted gross income limits.
Qualifying losses include losses from
casualties and thefts that arose in the
disaster area and were attributable to the
storms, tornadoes, or flooding.
The replacement period for postponing
gain on property in these disaster areas that
was damaged, destroyed, or stolen has
been extended to 5 years, but only if
substantially all of the use of the
replacement property is in those disaster
areas. For more information, see Gain on
Reimbursement, that begins on this page,
and Gains Realized on Homes in Disaster
Areas that begins on page 2.
You may also be entitled to other tax
benefits not covered in these instructions.
For more information, see Pub. 4492-A,
Information for Taxpayers Affected by the
May 4, 2007, Kansas Storms and
Tornadoes, or Pub. 4492-B, Information for
Affected Taxpayers in the Midwestern
Disaster Areas.
Kansas disaster area. The Kansas
disaster area covers the Kansas counties of
Barton, Clay, Cloud, Comanche, Dickinson,
Edwards, Ellsworth, Kiowa, Leavenworth,
Lyon, McPherson, Osage, Osborne, Ottawa,
Phillips, Pottawatomie, Pratt, Reno, Rice,
Riley, Saline, Shawnee, Smith, and Stafford,
that were affected by the storms and
tornadoes that began on May 4, 2007.
If you lived in the Kansas disaster area
and deducted your loss in 2007 or elected to
deduct the loss in 2006, do not use the 2008
Form 4684. Instead, see Pub. 4492-A for
special instructions on how to complete your
tax forms.
Midwestern disaster areas. A
Midwestern disaster area is an area for
which a major disaster was declared by the
President during the period beginning on
May 20, 2008, and ending on July 31, 2008,
in the state of Arkansas, Illinois, Indiana,
Iowa, Kansas, Michigan, Minnesota,
Missouri, Nebraska, or Wisconsin as a result
of severe storms, tornadoes, or flooding that
occurred on the applicable disaster date.
See Table 1 on page 6 for a list of counties
included in the Midwestern disaster areas.
The term “applicable disaster date” as
used in these instructions, refers to the date
on which the severe storms, tornadoes, or

The new rules are as follows.
1. The net disaster loss (defined in (3)
below) is not subject to the 10% of adjusted
gross income limit.
2. You can deduct a net disaster loss
even if you do not itemize your deductions
on Schedule A (Form 1040). You do this by
completing Form 4684 and entering your net
disaster loss on line 6 of the Standard
Deduction Worksheet-Line 40 in the Form
1040 Instructions.
3. Your net disaster loss is the excess
of —
a. Your personal casualty losses
attributable to a federally declared disaster
and occurring in a disaster area, over
b. Your personal casualty gains.
Special rules for individuals impacted by
Hurricanes Katrina, Rita, and Wilma. If
you claimed a casualty or theft loss
deduction and in a later year you received
more reimbursement than you expected,
you do not recompute the tax for the year in
which you claimed the deduction. Instead,
you must include the reimbursement in your
income for the year in which it was received,
but only to the extent the original deduction
reduced your tax for the earlier year.
However, an exception applies if you
claimed a casualty or theft loss deduction for
damage to or destruction of your main home
caused by Hurricane Katrina, Rita, or Wilma,
and in a later year you received a hurricane
relief grant. Under this exception, you can
choose to file an amended income tax return
(Form 1040X) for the tax year in which you
claimed the deduction (and for any tax year
to which such deduction was carried) and
reduce (but not below zero) the amount of
the deduction by the amount of the grant. If
you make this choice, you must file Form
1040X by the later of:
• The due date for filing your tax return for
the tax year in which you receive the grant
(including extensions), or
• July 30, 2009.
For more information, see Pub. 547.
Cat. No. 12998Z

Purpose of Form
Use Form 4684 to report gains and losses
from casualties and thefts. Attach Form
4684 to your tax return.

Losses You Can Deduct
You can deduct losses from fire, storm,
shipwreck, or other casualty, or theft (for
example, larceny, embezzlement, and
robbery).
If your property is covered by insurance,
you must file a timely insurance claim for
reimbursement of your loss. Otherwise, you
cannot deduct the loss as a casualty or theft
loss. However, the part of the loss that is not
covered by insurance is still deductible.
Related expenses. The related expenses
you have due to a casualty or theft, such as
expenses for the treatment of personal
injuries or for the rental of a car, are not
deductible as casualty or theft losses.
Costs for protection against future
casualties are not deductible but should be
capitalized as permanent improvements. An
example would be the cost of a levee to stop
flooding.

Losses You Cannot
Deduct

• Money or property misplaced or lost.
• Breakage of china, glassware, furniture,

and similar items under normal conditions.
• Progressive damage to property
(buildings, clothes, trees, etc.) caused by
termites, moths, other insects, or disease.

Gain on Reimbursement
If the amount you receive in insurance or
other reimbursement is more than the cost
or other basis of the property, you have a
gain. If you have a gain, you may have to
pay tax on it, or you may be able to
postpone the gain.
Do not report the gain on damaged,
destroyed, or stolen property if you receive
property that is similar or related to it in
service or use. Your basis in the new
property is the same as your basis in the old
property.
Any tangible replacement property held
for use in a trade or business is treated as
similar or related in service or use to
property held for use in a trade or business
or for investment if:
• The property you are replacing was
damaged or destroyed in a disaster, and
• The area in which the property was
damaged or destroyed was declared by the
President of the United States to warrant
federal assistance because of that disaster.
Generally, you must recognize the gain if
you receive unlike property or money as

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reimbursement. But you generally can
choose to postpone all or part of the gain if,
within 2 years of the end of the first tax year
in which any part of the gain is realized, you
purchase:
• Property similar or related in service or
use to the damaged, destroyed, or stolen
property, or
• A controlling interest (at least 80%) in a
corporation owning such property.
The replacement period is 5 years,
instead of 2 years, if the property was
located in the:
• New York Liberty Zone (as defined in
section 1400L(h) or Pub. 547) and that
property was converted as a result of the
terrorist attacks on September 11, 2001, in
the New York Liberty Zone, but only if
substantially all of the use of the
replacement property is in the city of New
York, New York.
• Hurricane Katrina disaster area (which
includes the states of Alabama, Florida,
Louisiana, and Mississippi) and that
property was converted after August 24,
2005, as a result of Hurricane Katrina, but
only if substantially all of the use of the
replacement property is in that disaster
area.
• Kansas disaster area (which includes the
Kansas counties of Barton, Clay, Cloud,
Comanche, Dickinson, Edwards, Ellsworth,
Kiowa, Leavenworth, Lyon, McPherson,
Osage, Osborne, Ottawa, Phillips,
Pottawatomie, Pratt, Reno, Rice, Riley,
Saline, Shawnee, Smith, and Stafford) and
that property was converted after May 3,
2007, as a result of the storms or tornadoes,
but only if substantially all of the use of the
replacement property is in that disaster
area.
• Midwestern disaster areas (which include
certain counties in the states of Arkansas,
Illinois, Indiana, Iowa, Kansas, Michigan,
Minnesota, Missouri, Nebraska, and
Wisconsin as shown in Table 1 on page 6)
and that property was converted on or after
the applicable disaster date as a result of
severe storms, tornadoes, or flooding, but
only if substantially all of the use of the
replacement property is in those disaster
areas.
To postpone all of the gain, the cost of
the replacement property must be equal to
or more than the reimbursement you
received for your property. If the cost of the
replacement property is less than the
reimbursement received, you must
recognize the gain to the extent the
reimbursement exceeds the cost of the
replacement property.
If the replacement property or stock is
acquired from a related person, gain
generally cannot be postponed by:
• Corporations (other than S corporations),
• Partnerships more than 50% owned by
one or more corporations (other than S
corporations), or
• All other taxpayers, unless the aggregate
realized gains on the involuntarily converted
property are $100,000 or less for the tax
year. This rule applies to partnerships and S
corporations at both the entity and partner or
shareholder level.
For details, see section 1033(i).
For details on how to postpone the gain,
see Pub. 547, Casualties, Disasters, and
Thefts.

If your main home was located in a
federally declared disaster area, a
Midwestern disaster area, or the Kansas
disaster area, and that home or any of its
contents were damaged or destroyed due to
the disaster, special rules apply. See Gains
Realized on Homes in Disaster Areas on
this page.

When To Deduct a Loss
Deduct the part of your casualty or theft loss
that is not reimbursable in the tax year the
casualty occurred or the theft was
discovered. However, a disaster loss and a
loss from deposits in insolvent or bankrupt
financial institutions may be treated
differently. See Disaster Losses below and
Special Treatment for Losses on Deposits in
Insolvent or Bankrupt Financial Institutions
on page 3.
If you are not sure whether part of your
casualty or theft loss will be reimbursed, do
not deduct that part until the tax year when
you become reasonably certain that it will
not be reimbursed.
If you are reimbursed for a loss you
deducted in an earlier year, include the
reimbursement in your income in the year
you received it, but only to the extent the
deduction reduced your tax in an earlier
year.
See Pub. 547 for special rules on when
to deduct losses from casualties and thefts
to leased property. Also see Special rules
for individuals impacted by Hurricanes
Katrina, Rita, and Wilma on page 1.

Disaster Losses
A disaster loss is a loss that occurred in an
area determined by the President of the
United States to warrant federal disaster
assistance. It includes a major disaster or
emergency declaration. A list of areas
warranting public or individual assistance (or
both) is available at the Federal Emergency
Management Agency (FEMA) website at
www.fema.gov.
If you have a casualty loss from a
disaster that occurred in an area warranting
public or individual assistance (or both), you
can elect to deduct the loss in the tax year
immediately prior to the tax year in which
the disaster occurred as long as the loss
would otherwise be allowed as a deduction
in the tax year it occurred.
This election must be made by filing your
return or amended return for the prior year,
and claiming your disaster loss on it, by the
later of:
• The due date for filing your original return
(without extensions) for the tax year in which
the disaster actually occurred, or
• The due date for filing your original return
(including extensions) for the tax year
immediately prior to the tax year in which
the disaster actually occurred.
You can revoke your election within 90
days after making it by returning to the IRS
any refund or credit you received from the
election. If you revoke your election before
receiving a refund, you must repay the
refund within 30 days after receiving it.
On the return on which you claim the
disaster loss, specify the date(s) of the
disaster and the city, town, county or parish,

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and state in which the damaged or
destroyed property was located.
To determine the amount to deduct for a
disaster loss, you must take into account as
reimbursements any benefits you received
or which you have a reasonable possibility
of receiving from federal or state programs
to restore your property.
If your home was located in a disaster
area and your state or local government
ordered you to tear it down or move it
because it was no longer safe to use as a
home because of the disaster, the loss in
value because it is no longer safe is treated
as a disaster loss. The order for you to tear
down or move the home must have been
issued within 120 days after the area was
officially declared a disaster area.
For purposes of figuring the disaster loss,
use the value of your home before you
moved it or tore it down as its fair market
value after the casualty.

Gains Realized on Homes
in Disaster Areas
The following rules apply if your main home
was located in an area declared by the
President of the United States to warrant
federal assistance as the result of a
disaster, and the home or any of its contents
were damaged or destroyed due to the
disaster. These rules also apply to renters
who receive insurance proceeds for
damaged or destroyed property in a rented
home that is their main home.
1. No gain is recognized on any
insurance proceeds received for
unscheduled personal property that was part
of the contents of the home.
2. Any other insurance proceeds you
receive for the home or its contents are
treated as received for a single item of
property, and any replacement property you
purchase that is similar or related in service
or use to the home or its contents is treated
as similar or related in service or use to that
single item of property. Therefore, you can
choose to recognize gain only to the extent
the insurance proceeds treated as received
for that single item of property exceed the
cost of the replacement property.
3. If you choose to postpone any gain
from the receipt of insurance or other
reimbursement for your main home or any of
its contents, the period in which you must
purchase replacement property is extended
until 4 years after the end of the first tax
year in which any part of the gain is realized.
However, the 4-year period is extended to 5
years if your main home or any of its
contents were located in the:
a. New York Liberty Zone (as defined in
section 1400L(h) or Pub. 547) and that
property was converted as a result of the
terrorist attacks on September 11, 2001, in
the New York Liberty Zone, but only if
substantially all of the use of the
replacement property is in the city of New
York, New York.
b. Hurricane Katrina disaster area
(which includes the states of Alabama,
Florida, Louisiana, and Mississippi) and that
property was converted after August 24,
2005, as a result of Hurricane Katrina, but
only if substantially all of the use of the
replacement property is in that disaster
area.

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c. Kansas disaster area (which includes
the Kansas counties of Barton, Clay, Cloud,
Comanche, Dickinson, Edwards, Ellsworth,
Kiowa, Leavenworth, Lyon, McPherson,
Osage, Osborne, Ottawa, Phillips,
Pottawatomie, Pratt, Reno, Rice, Riley,
Saline, Shawnee, Smith, and Stafford) and
that property was converted after May 3,
2007, as a result of the storms or tornadoes,
but only if substantially all of the use of the
replacement property is in that disaster
area.
d. Midwestern disaster areas (which
include certain counties in the states of
Arkansas, Illinois, Indiana, Iowa, Kansas,
Michigan, Minnesota, Missouri, Nebraska,
and Wisconsin as shown in Table 1 on page
6) and that property was converted on or
after the applicable disaster date as a result
of severe storms, tornadoes, or flooding, but
only if substantially all of the use of the
replacement property is in those disaster
areas.
For details on how to postpone gain, see
Pub. 547.
Example. Your main home and its
contents were completely destroyed in 2008
by a tornado in a federally declared disaster
area. The property was not located in a
Midwestern disaster area. In 2008, you
received insurance proceeds of $200,000
for the home, $25,000 for unscheduled
personal property in your home, $5,000 for
jewelry, and $10,000 for a stamp collection.
The jewelry and stamp collection were kept
in your home and were scheduled property
on your insurance policy. No gain is
recognized on the $25,000 you received for
the unscheduled personal property. If you
reinvest the remaining proceeds of
$215,000 in a replacement home, any type
of replacement contents (whether scheduled
or unscheduled), or both, you can elect to
postpone any gain on your home, jewelry, or
stamp collection. If you reinvest less than
$215,000, any gain is recognized only to the
extent $215,000 exceeds the amount you
reinvest in a replacement home, any type of
replacement contents (whether scheduled or
unscheduled), or both. To postpone gain,
you must purchase the replacement
property before 2013.Your basis in the
replacement property equals its cost
decreased by the amount of any postponed
gain.

Special Treatment for
Losses on Deposits in
Insolvent or Bankrupt
Financial Institutions
If you are an individual who incurred a loss
from a deposit in a bank, credit union, or
other financial institution because of the
bankruptcy or insolvency of that institution
and you can reasonably estimate your loss,
you can elect to deduct the loss as:
• A casualty loss to personal use property
on Form 4684, or
• An ordinary loss (miscellaneous itemized
deduction) on Schedule A (Form 1040),
Itemized Deductions, line 23, or Schedule A
(Form 1040NR), Itemized Deductions, line
11. You cannot elect the ordinary loss
deduction if any part of the deposits related
to the loss is federally insured. The
maximum amount you can claim is $20,000

($10,000 if you are married filing
separately). Your deduction is reduced by
any expected state insurance proceeds and
is subject to the 2% adjusted gross income
limit.

If property is used partly in a trade or
business and partly for personal purposes,
such as a personal home with a rental unit,
figure the personal part in Section A and the
business part in Section B.

If you elect to deduct the estimated loss
as a casualty loss or as an ordinary loss,
you cannot claim the same loss as a
nonbusiness bad debt. If the estimated loss
deducted is less than the actual loss, you
can claim the difference as a nonbusiness
bad debt for the year in which the final
determination of the loss occurs. A
nonbusiness bad debt is deducted on
Schedule D (Form 1040), Capital Gains and
Losses, as a short-term capital loss.

Section A—Personal Use
Property

If you are a 1% or more owner or an
officer of the financial institution, or are
related to any such owner or officer, you
cannot deduct the loss as a casualty loss or
as an ordinary loss. See Pub. 550,
Investment Income and Expenses, for the
definition of “related.”
If you elect to deduct the loss as a
casualty loss or as an ordinary loss and you
have more than one account in the same
financial institution, you must include all your
accounts. Once you make the election, you
cannot change it without permission from
the IRS. See Notice 89-28, 1989-1 C.B. 667,
for more details.
To elect to deduct the loss as a casualty
loss, complete Form 4684 as follows: On
line 1, enter the name of the financial
institution and “Insolvent Financial
Institution.” Skip lines 2 through 9. Enter the
amount of the loss on line 10, and complete
the rest of Section A.
If, in a later year, you recover an amount
you deducted as a loss, you may have to
include in your income the amount
recovered for that year. For details, see
Recoveries in Pub. 525, Taxable and
Nontaxable Income.

Specific Instructions
Which Sections To
Complete
Use Section A to figure casualty or theft
gains and losses for property that is not
used in a trade or business or for
income-producing purposes.
Nonbusiness casualty or theft losses are
deductible only to the extent that the amount
of the loss from each separate casualty or
theft is more than $100 and the total amount
of all losses (as so reduced) during the year
is more than 10% of adjusted gross income
(Form 1040, line 38, or Form 1040NR, line
36). However, these limits do not apply to
losses that arose in the Midwestern disaster
areas (defined on page 1 under What’s
New) and that were caused by the severe
storms, tornadoes, or flooding. The 10%
limit does not apply to net disaster losses
resulting from federally declared disasters
(defined on page 1 under What’s New). (The
$100 limit does apply.)
Use Section B to figure casualty or theft
gains and losses for property that is used in
a trade or business or for income-producing
purposes.

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Use a separate column for lines 1 through 9
to show each item lost or damaged from a
single casualty or theft. If more than four
items were lost or damaged, use additional
sheets following the format of lines 1
through 9.
Use a separate Form 4684 through line
12 for each casualty or theft involving
property not used in a trade or business or
for income-producing purposes.
Do not include any loss previously
deducted on an estate tax return.
If you are liable for casualty or theft
losses to property you lease from someone
else, see Pub. 547.

Line 2
Cost or other basis usually means original
cost plus improvements. Subtract any
postponed gain from the sale of a previous
main home. Special rules apply to property
received as a gift or inheritance. See Pub.
551, Basis of Assets, for details.

Line 3
Enter on this line the amount of insurance or
other reimbursement you received or expect
to receive for each property. Include your
insurance coverage whether or not you are
filing a claim for reimbursement. For
example, your car worth $2,000 is totally
destroyed in a collision. You are insured
with a $500 deductible, but decide not to
report it to your insurance company because
you are afraid the insurance company will
cancel your policy. In this case, enter $1,500
on this line.
If you expect to be reimbursed but have
not yet received payment, you must still
enter the expected reimbursement from the
loss. If, in a later tax year, you determine
with reasonable certainty that you will not be
reimbursed for all or part of the loss, you
can deduct for that year the amount of the
loss that is not reimbursed.
Types of reimbursements. Insurance is
the most common way to be reimbursed for
a casualty or theft loss, but if:
• Part of a federal disaster loan is forgiven,
the part you do not have to pay back is
considered a reimbursement.
• The person who leases your property
must make repairs or must repay you for
any part of a loss, the repayment and the
cost of the repairs are considered
reimbursements.
• A court awards you damages for a
casualty or theft loss, the amount you are
able to collect, minus lawyers’ fees and
other necessary expenses, is a
reimbursement.
• You accept repairs, restoration, or
cleanup services provided by relief
agencies, it is considered a reimbursement.
• A bonding company pays you for a theft
loss, the payment is also considered a
reimbursement.
Lump-sum reimbursement. If you have a
casualty or theft loss of several assets at the
same time and you receive a lump-sum

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reimbursement, you must divide the amount
you receive among the assets according to
the fair market value of each asset at the
time of the loss.
Grants, gifts, and other payments.
Grants and other payments you receive to
help you after a casualty are considered
reimbursements only if they must be used
specifically to repair or replace your
property. Such payments will reduce your
casualty loss deduction. If there are no
conditions on how you have to use the
money you receive, it is not a
reimbursement.
Use and occupancy insurance. If
insurance reimburses you for your loss of
business income, it does not reduce your
casualty or theft loss. The reimbursement is
income, and is taxed in the same manner as
your business income.
Main home destroyed. If you have a gain
because your main home was destroyed,
you generally can exclude the gain from
your income as if you had sold or
exchanged your home. You may be able to
exclude up to $250,000 of the gain (up to
$500,000 if married filing jointly). To exclude
a gain, you generally must have owned and
lived in the property as your main home for
at least 2 years during the 5-year period
ending on the date it was destroyed. For
information on this exclusion, see Pub. 523.
If you exclude the gain and the entire
gain is excludable, do not report the
casualty on Form 4684. If the gain is more
than you can exclude, reduce the insurance
or other reimbursement by the amount of
the exclusion and enter the result on line 3.
Attach a statement showing the full amount
of insurance or other reimbursement and the
amount of the exclusion. You may be able to
postpone reporting the excess gain if you
buy replacement property. See Gain on
Reimbursement, that begins on page 1, and
Gains Realized on Homes in Disaster
Areas, that begins on page 2.

Line 4
If you are entitled to an insurance payment
or other reimbursement for any part of a
casualty or theft loss but you choose not to
file a claim for the loss, you cannot realize a
gain from that payment or reimbursement.
Therefore, figure the gain on line 4 by
subtracting your cost or other basis in the
property (line 2) only from the amount of
reimbursement you actually received. Enter
the result on line 4, but do not enter less
than zero.
If you filed a claim for reimbursement but
did not receive it until after the year of the
casualty or theft, include the gain in your
income in the year you received the
reimbursement.

Lines 5 and 6
Fair market value (FMV) is the price at
which the property would be sold between a
willing buyer and a willing seller, each
having knowledge of the relevant facts. The
difference between the FMV immediately
before the casualty or theft and the FMV
immediately after represents the decrease in
FMV because of the casualty or theft.
The FMV of property after a theft is zero
if the property is not recovered.
FMV is generally determined by a
competent appraisal. The appraiser’s

knowledge of sales of comparable property
about the same time as the casualty or theft,
knowledge of your property before and after
the occurrence, and the methods of
determining FMV are important elements in
proving your loss.
The appraised value of property
immediately after the casualty must be
adjusted (increased) for the effects of any
general market decline that may occur at the
same time as the casualty or theft. For
example, the value of all nearby property
may become depressed because it is in an
area where such occurrences are
commonplace. This general decline in
market value is not part of the property’s
decrease in FMV as a result of the casualty
or theft.
Replacement cost or the cost of repairs
is not necessarily FMV. However, you may
be able to use the cost of repairs to the
damaged property as evidence of loss in
value if:
• The repairs are necessary to restore the
property to the condition it was in
immediately before the casualty,
• The amount spent for repairs is not
excessive,
• The repairs only correct the damage
caused by the casualty, and
• The value of the property after the repairs
is not, as a result of the repairs, more than
the value of the property immediately before
the casualty.
To figure a casualty loss to real estate
not used in a trade, business, or for
income-producing purposes, measure the
decrease in value of the property as a
whole. All improvements, such as buildings,
trees, and shrubs, are considered together
as one item. Figure the loss separately for
other items. For example, figure the loss
separately for each piece of furniture.

Line 11
The Midwestern disaster areas are defined
on page 1 under What’s New. For a list of
the counties in these areas and the
applicable disaster dates, see Table 1 on
page 6.

Line 15
If line 14 is more than line 13:

• Combine your short-term gains with your

short-term losses and include the net
short-term gain or (loss) on Schedule D
(Form 1040), line 4. Estates and trusts
include this amount on Schedule D (Form
1041), line 2.
• Combine your long-term gains with your
long-term losses and include the net
long-term gain or (loss) on Schedule D
(Form 1040), line 11. Estates and trusts
include this amount on Schedule D (Form
1041), line 7.
The holding period for long-term gains
and losses is more than 1 year. For
short-term gains and losses, it is 1 year or
less. To figure the holding period, begin
counting on the day after you received the
property and include the day the casualty or
theft occurred.

Line 17
Do not include on line 17 any losses that
arose in a Midwestern disaster area (as
defined on page 1). A loss arising in a
Midwestern disaster area is not considered

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a loss attributable to a federally declared
disaster for purposes of this line and cannot
be added to your standard deduction.

Line 18a
If you are filing Form 1040NR, Schedule A,
go to Form 4684, line 19.
If you are a nonresident alien student or
business apprentice from India and are
claiming the standard deduction, do the
following.
• Enter this amount on Worksheet 5-1 in
Pub. 519.
• If your standard deduction also includes
the deduction for state or local real estate
taxes, go to line 18b. Otherwise, do not
complete the rest of Section A.

Line 22
Estates and trusts figure adjusted gross
income in the same way as individuals,
except that the costs of administration are
allowed in figuring adjusted gross income.

Section B—Business and
Income-Producing Property
Use a separate column of Part I, lines 25
through 33, to show each item lost or
damaged from a single casualty or theft. If
more than four items were lost or damaged,
use additional sheets following the format of
Part I, lines 25 through 33.
Use a separate Form 4684, Section B,
Part I, for each casualty or theft involving
property used in a trade or business or for
income-producing purposes. Use one
Section B, Part II, to combine all Sections B,
Part I.
For details on the treatment of casualties
or thefts to business or income-producing
property, including rules on the loss of
inventory through casualty or theft, see Pub.
547.
If you had a casualty or theft loss
involving a home you used for business or
rented out, your deductible loss may be
limited. First, complete Form 4684, Section
B, lines 25 through 32. If the loss involved a
home used for a business for which you are
filing Schedule C (Form 1040), Profit or Loss
From Business, figure your deductible
casualty or theft loss on Form 8829,
Expenses for Business Use of Your Home.
Enter on Form 4684, line 33, the deductible
loss from Form 8829, line 34, and “See
Form 8829” above line 33. For a home you
rented out or used for a business for which
you are not filing Schedule C (Form 1040),
see section 280A(c)(5) to figure your
deductible loss. Attach a statement showing
your computation of the deductible loss,
enter that amount on line 33 and “See
attached statement” above line 33.
Note. A gain or loss from a casualty or
theft of property used in a passive activity is
not taken into account in determining the
loss from a passive activity unless losses
similar in cause and severity recur regularly
in the activity. See Form 8582, Passive
Activity Loss Limitations, and its instructions
for details.

Section 179 Property of a
Partnership or S corporation
Partnerships (other than electing large
partnerships) and S corporations that have a

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Instructions for Form 4684

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casualty or theft involving property for which
the section 179 expense deduction was
previously claimed and passed through to
the partners or shareholders must not use
Form 4684 to report the transaction.
Instead, see the Instructions for Form 4797
for details on how to report it. Partners and
S corporation shareholders who receive a
Schedule K-1 reporting such a transaction
should see the Instructions for Form 4797
for details on how to figure the amount to
enter on Form 4684, line 26.

Line 26
Cost or adjusted basis usually means
original cost plus improvements, minus
depreciation allowed or allowable (including
any section 179 expense deduction),
amortization, depletion, etc. Special rules
apply to property received as a gift or
inheritance. See Pub. 551 for details.

Line 27
See the instructions for line 3 that begin on
page 3.

Line 28
See the instructions for line 4 on page 4.

Lines 29 and 30
See the instructions for lines 5 and 6 on
page 4 for details on determining FMV.
Loss on each item figured separately.
Unlike a casualty loss to personal use real
estate, in which all improvements are
considered one item, a casualty loss to
business or income-producing property must
be figured separately for each item. For
example, if casualty damage occurs to both
a building and to trees on the same piece of
real estate, measure the loss separately for
the building and for the trees.

Line 34
If the amount on line 34 includes losses on
property held 1 year or less, and losses on
property held for more than 1 year, you must
allocate the amount between lines 35 and
40 according to how long you held each
property. Enter on line 35 all gains and
losses on property held 1 year or less. Enter
on line 40 all gains and losses on property
held more than 1 year, except as provided in
the instructions for line 39.

Part II, Column (a)
Use a separate line for each casualty or
theft.

Part II, Column (b)(i)
Enter the part of line 34 from trade,
business, rental, or royalty property (other
than property you used in performing
services as an employee).

Part II, Column (b)(ii)
Enter the part of line 34 from
income-producing property and from
property you used in performing services as
an employee. Income-producing property is
property held for investment, such as
stocks, notes, bonds, gold, silver, vacant
lots, and works of art.

Line 37
If Form 4797, Sales of Business Property, is
not otherwise required, enter the amount
from this line on page 1 of your tax return,
on the line identified as from Form 4797.
Next to that line, enter “Form 4684.”

Line 38
Estates and trusts, enter on the “Other
deductions” line of your tax return.
Partnerships (except electing large
partnerships), enter on Form 1065,
Schedule K, line 13d. Electing large
partnerships, enter on Form 1065-B, Part II,
line 11. S corporations, enter on Form
1120S, Schedule K, line 12d. Next to that
line, enter “Form 4684.”

Line 39
If you had a casualty or theft gain from
certain trade, business, or income-producing
property held more than 1 year, you may
have to recapture part or all of the gain as
ordinary income. See the instructions for
Form 4797, Part III, for more information on
the types of property subject to recapture. If
recapture applies, complete Form 4797,
Part III, and this line, instead of Form 4684,
line 40.

Line 44a
Taxpayers, other than partnerships and S
corporations, if Form 4797 is not otherwise
required, enter the amount from this line on

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page 1 of your tax return, on the line
identified as from Form 4797. Next to that
line, enter “Form 4684.”
Paperwork Reduction Act Notice. We
ask for the information on this form to carry
out the Internal Revenue laws of the United
States. You are required to give us the
information. We need it to ensure that you
are complying with these laws and to allow
us to figure and collect the right amount of
tax.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB control
number. Books or records relating to a form
or its instructions must be retained as long
as their contents may become material in
the administration of any Internal Revenue
law. Generally, tax returns and return
information are confidential, as required by
section 6103.
The time needed to complete and file this
form will vary depending on individual
circumstances. The estimated burden for
individual taxpayers filing this form is
approved under OMB control number
1545-0074 and is included in the estimates
shown in the instructions for their individual
income tax return. The estimated burden for
all other taxpayers who file this form is
shown below.

Recordkeeping . . . . . . . . 1 hr., 58 min.
Learning about the law or
the form . . . . . . . . . . . . .

27 min.

Preparing the form . . . . . 1 hr., 7 min.
Copying, assembling,
and sending the form to
the IRS . . . . . . . . . . . . . .

34 min.

If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form simpler, we
would be happy to hear from you. See the
instructions for the tax return with which this
form is filed.

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Instructions for Form 4684

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table 1. Midwestern Disaster Areas
The counties listed below are in Midwestern disaster areas. Disaster losses occurring in these counties on the applicable disaster dates qualify for the waiver
of the $100 and 10% of adjusted gross income limits and for the 5-year replacement period.
Applicable Disaster Date*

State

Affected Counties — Midwestern Disaster Areas

05/02/2008

Arkansas

Arkansas, Benton, Cleburne, Conway, Crittenden, Grant, Lonoke, Mississippi,
Phillips, Pulaski, Saline, and Van Buren.

06/01/2008

Illinois

Adams, Calhoun, Clark, Coles, Crawford, Cumberland, Douglas, Edgar, Greene,
Hancock, Henderson, Jasper, Jersey, Lake, Lawrence, Madison, Mercer,
Monroe, Pike, Randolph, Rock Island, St. Clair, Scott, Whiteside, and Winnebago

06/06/2008

Indiana

Adams, Bartholomew, Benton, Boone, Brown, Clay, Daviess, Dearborn, Decatur,
Fountain, Franklin, Gibson, Grant, Greene, Hamilton, Hancock, Hendricks,
Henry, Huntington, Jackson, Jay, Jefferson, Jennings, Johnson, Knox, Lawrence,
Madison, Marion, Montgomery, Monroe, Morgan, Ohio, Owen, Parke, Pike,
Posey, Putnam, Randolph, Ripley, Rush, Shelby, Sullivan, Switzerland,
Tippecanoe, Union, Vermillion, Vigo, Wabash, Washington, and Wayne.

05/25/2008

Iowa

Adair, Adams, Allamakee, Appanoose, Audubon, Benton, Black Hawk, Boone,
Bremer, Buchanan, Butler, Carroll, Cass, Cedar, Cerro Gordo, Cherokee,
Chickasaw, Clarke, Clayton, Clinton, Crawford, Dallas, Davis, Decatur, Delaware,
Des Moines, Dubuque, Fayette, Floyd, Franklin, Fremont, Greene, Grundy,
Guthrie, Hamilton, Hancock, Hardin, Harrison, Henry, Howard, Humboldt, Iowa,
Jackson, Jasper, Johnson, Jones, Keokuk, Kossuth, Lee, Linn, Louisa, Lucas,
Lyon, Madison, Mahaska, Marion, Marshall, Mills, Mitchell, Monona, Monroe,
Montgomery, Muscatine, Page, Palo Alto, Pocahontas, Polk, Pottawattamie,
Poweshiek, Ringgold, Scott, Story, Tama, Taylor, Union, Van Buren, Wapello,
Warren, Washington, Wayne, Webster, Winnebago, Winneshiek, Worth, and
Wright.

05/22/2008

Kansas

Barber, Barton, Bourbon, Brown, Butler, Chautauqua, Cherokee, Clark, Clay,
Comanche, Cowley, Crawford, Decatur, Dickinson, Edwards, Elk, Ellis, Ellsworth,
Franklin, Gove, Graham, Harper, Haskell, Hodgeman, Jackson, Jewell, Kingman,
Kiowa, Lane, Linn, Logan, Mitchell, Montgomery, Ness, Norton, Osborne,
Pawnee, Phillips, Pratt, Reno, Republic, Riley, Rooks, Rush, Saline, Seward,
Sheridan, Smith, Stafford, Sumner, Thomas, Trego, Wallace, and Wilson.

06/06/2008

Michigan

Allegan, Barry, Eaton, Ingham, Lake, Manistee, Mason, Missaukee, Osceola,
Ottawa, Saginaw, and Wexford.

06/07/2008

Minnesota

Cook, Fillmore, Freeborn, Houston, Mower, and Nobles.

05/10/2008

Missouri

Barry, Jasper, and Newton.

06/01/2008

Missouri

Adair, Andrew, Atchison, Audrain, Bates, Buchanan, Callaway, Cape Girardeau,
Carroll, Cass, Chariton, Christian, Clark, Daviess, Gentry, Greene, Grundy,
Harrison, Holt, Howard, Jefferson, Johnson, Knox, Lewis, Lincoln, Linn,
Livingston, Macon, Marion, Mercer, Miller, Mississippi, Monroe, Morgan, New
Madrid, Nodaway, Pemiscot, Perry, Pettis, Pike, Platte, Polk, Putnam, Ralls,
Randolph, Ray, Saline, Schuyler, Scotland, Shelby, St. Charles, St. Genevieve,
St. Louis, the Independent City of St. Louis, Scott, Stone, Sullivan, Taney,
Vernon, Webster, and Worth.

04/23/2008

Nebraska

Gage, Johnson, Morrill, Nemaha, and Pawnee.

05/22/2008

Nebraska

Adams, Blaine, Boone, Boyd, Brown, Buffalo, Burt, Butler, Cass, Chase, Cherry,
Colfax, Cuming, Custer, Dawson, Douglas, Dundy, Fillmore, Frontier, Furnas,
Gage, Garfield, Gosper, Greeley, Hall, Hamilton, Hayes, Holt, Howard, Jefferson,
Johnson, Kearney, Keya Paha, Lancaster, Lincoln, Logan, Loup, Merrick,
McPherson, Morrill, Nance, Nemaha, Otoe, Phelps, Platte, Polk, Red Willow,
Richardson, Rock, Saline, Sarpy, Saunders, Seward, Sherman, Stanton, Thayer,
Thomas, Thurston, Valley, Webster, Wheeler, and York.

06/27/2008

Nebraska

Dodge, Douglas, Sarpy, and Saunders.

06/05/2008

Wisconsin

Adams, Calumet, Crawford, Columbia, Dane, Dodge, Fond du Lac, Grant, Green,
Green Lake, Iowa, Jefferson, Juneau, Kenosha, La Crosse, Lafayette,
Manitowoc, Marquette, Milwaukee, Monroe, Ozaukee, Racine, Richland, Rock,
Sauk, Sheboygan, Vernon, Walworth, Washington, Waukesha, and Winnebago.

*In some cases, the date will be later due to the continuation of the severe storms, tornadoes, or flooding that began on the date shown above. For more details, go to
www.fema.gov.

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