Introduction

This chapter explains the tax treatment of casualties, thefts, and condemnations. A casualty occurs when property is damaged, destroyed, or lost due to a sudden, unexpected, or unusual event. A theft occurs when property is stolen. A condemnation occurs when private property is legally taken for public use without the owner’s consent. A casualty, theft, or condemnation may result in a deductible loss or taxable gain on your federal income tax return. You may have a deductible loss or a taxable gain even if only a portion of your property was affected by a casualty, theft, or condemnation.

An involuntary conversion occurs when you receive money or other property as reimbursement for a casualty, theft, condemnation, disposition of property under threat of condemnation, or certain other events discussed in this chapter.

If an involuntary conversion results in a gain and you buy qualified replacement property within the specified replacement period, you can postpone reporting the gain on your income tax return. For more information, see Postpon- ing Gain , later.

68 Chapter 11 Casualties, Thefts, and Condemnations Publication 225 (2025)

Topics This chapter discusses:

• Casualties and thefts

• How to figure a loss or gain

• Other involuntary conversions

• Postponing gain

• Disaster area losses

• Reporting gains and losses

Useful Items You may want to see:

Publication

523

525

542

544

547

584

523 Selling Your Home

525 Taxable and Nontaxable Income

542 Corporations

544 Sales and Other Dispositions of Assets

547 Casualties, Disasters, and Thefts

584 Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property)

584-B 584- B usiness Casualty, Disaster, and

Theft Loss Workbook

Form (and Instructions)

Sch A (Form 1040)

Sch A (Form 1040) Itemized Deductions

Sch D (Form 1040) Sch D (Form 1040) Capital Gains and

Losses

Sch F (Form 1040) Sch F (Form 1040) Profit or Loss From

Farming

172

4684

4797

172 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts

4684 Casualties and Thefts

4797 Sales of Business Property

See How To Get Tax Help for information about getting publications and forms.