Farmer's Tax Guide›2025 Returns›11. Casualties, Thefts, and Condemnations
! beginning in 2018 or later may not be
2025 Publ 225 (PDF) · 2026-10-03 edition · updated 2026-10-04 · United States
CAUTION carried back and instead must be car-
ried forward indefinitely. However, farming los- ses resulting in an NOL, arising in tax years be- ginning in 2018 or later, may be carried back 2 years and carried forward indefinitely.
Proof of Loss
To deduct a casualty or theft loss, you must be able to prove that there was a casualty or theft. You must have records to support the amount you claim for the loss.
Casualty loss proof. For a casualty loss, your records should show all the following information.
That you were the owner of the property or, if you leased the property from someone else, that you were contractually liable to the owner for the damage.
The type of casualty (car accident, fire, storm, etc.) and when it occurred.
That the loss was a direct result of the casualty.
Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery.
Theft loss proof. For a theft loss, your records should show all the following information.
That you were the owner of the property.
That your property was stolen.
When you discovered your property was missing.
Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery.
Figuring a Gain
A casualty or theft may result in a taxable gain. If you receive an insurance payment or other reimbursement that is more than your adjusted basis in the destroyed, damaged, or stolen property, you have a gain from the casualty or theft. You generally report your gain as income in the year you receive the reimbursement. However, depending on the type of property you receive, you may not have to report your gain. See Postponing Gain, later.
Your gain is figured as follows:
The amount you receive, minus
Your adjusted basis in the property at the time of the casualty or theft.
Even if the decrease in FMV of your property is smaller than the adjusted basis of your property, use your adjusted basis to figure the gain.
Amount you receive. The amount you receive includes any money plus the value of any property you receive, minus any expenses you have in obtaining reimbursement. It also includes any reimbursement used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property.
72 Chapter 11 Casualties, Thefts, and Condemnations Publication 225 (2025)
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