Need IRS tax advice for casualty loss deduction (not hurricane-related)

[rgesner]

I'm looking for a CPA accountant who can provide tax advice for deducting a non-hurricane related casualty loss for a sailing yacht in private non-commercial use.
If you can provide such services, or can recommend an accountant who can, please PM me.
Thanks

[TrentePieds]

The Portland Yellow Pages should list them by the dozen :-)!

TP

[Dsanduril]

In the US it's not that difficult unless you are trying to characterize the loss as something other than a casualty loss:

Adjusted cost basis - any insurance reimbursement - $100 - 10% AGI.

Deduct any remaining amount. If allowable loss exceeds total income you end up with a net operating loss (NOL) and casualty is one of the few places where a private individual (as opposed to a business) can use a NOL. If your loss is that big then maybe a CPA would be helpful but otherwise not tough (internet advice being worth what was paid for it).

Shipwreck is specifically listed as one of the casualty losses that can be claimed by both business and individual. Fill out form 4864, submit with tax return and call it done. You will have to be able to defend your adjusted cost basis, this is another place where a CPA may provide value, you can get them to defend it

[BillsWife1]

Originally Posted by Dsanduril

In the US it's not that difficult unless you are trying to characterize the loss as something other than a casualty loss:

Adjusted cost basis - any insurance reimbursement - $100 - 10% AGI.

Deduct any remaining amount. If allowable loss exceeds total income you end up with a net operating loss (NOL) and casualty is one of the few places where a private individual (as opposed to a business) can use a NOL. If your loss is that big then maybe a CPA would be helpful but otherwise not tough (internet advice being worth what was paid for it).

Shipwreck is specifically listed as one of the casualty losses that can be claimed by both business and individual. Fill out form 4864, submit with tax return and call it done. You will have to be able to defend your adjusted cost basis, this is another place where a CPA may provide value, you can get them to defend it

All excellent advice. A couple of things to add. You do not need a CPA. You need a tax professional. CPA's are not all tax professionals. The skill set varies widely. If you do go the CPA route be sure that they engage in personal tax work, many don't (or charge crazy fees) since the revenue stream is not significant enough to their whole business. You are better off looking for an IRS Enrolled Agent. These individuals will be more cost effective and more knowledgeable on the matters of taxation than many CPA's.

Second, having been down this road with clients I can tell you documentation on the adjusted cost basis prior to the loss and the residual market value after the loss is an IRS boondoggle. I would enlist the help of a boat broker that can provide you with actual sale prices (not list prices) of boats like yours. Get as many as you can with the actual listing and photos of those boats. Keep photographic evidence of your own boat pre and post loss. You must document the actual value of the loss with substantive evidence at how you determined the value of the loss. This may mean that you need to have the boat surveyed or at minimum several estimates from marine professionals.

While the documentation process is arduous do not be bullied by the IRS. Document and then stand up to them if they come calling.

Lastly, sorry for your loss.

~~The retired tax lady

[carlheintz]

Sorry to say, all the answers you got prior to this one are no longer valid. Starting in 2018: With the new law, taxpayers may claim personal casualty losses only if the damage is attributable to a disaster declared by the president. This limitation starts in 2018 and will expire at the end of 2025.

I'm a CPA.

[SFS]

Yeah, and there is no more itemizing of deductions either. Lots of people are going to be really surprised come tax time.

[carlheintz]

NO, NO, and more NO!

Itemized deductions still exist.
Changes to itemized deductions:
1. Medical "hurdle" is now 7.5% of AGI, not 10%
2. State and local taxes (including property taxes) now capped at 10,000
3. Mortgage interest on new loans capped at loan amount no greater than
750,000.
4. Home equity debt not used for improving home no longer deductible
( ie cash out refi's to pay for other stuff does not yield deductible interest)
5. Miscellaneous itemized deductions are now no longer deductible.
6. Casualty losses no longer deductible, except for those occurring in Presidential declared disaster areas.

Most people will opt for the 24,000 standard deduction(MFJ)

[rgesner]

Well, my loss was in 2017 so it would still be deductible.
(I filed an extension, so I have not filed my 2017 return yet.)
Thanks

[BillsWife1]

Originally Posted by carlheintz

Sorry to say, all the answers you got prior to this one are no longer valid. Starting in 2018: With the new law, taxpayers may claim personal casualty losses only if the damage is attributable to a disaster declared by the president. This limitation starts in 2018 and will expire at the end of 2025.

I'm a CPA.

Carl, You are a CPA I would hire to do my taxes. I defer to your expertise in that you are absolutely spot on. It was a reminder of how quickly things change and what it takes to stay up to date in the tax profession. It also reminded me how glad I am to have retired three years ago.

[lionspaw]

Casualty losses are no longer tax deductible under the new tax law.

[carlheintz]

Casualty losses ARE STILL deductible (subject to the same old limitations) but only if they occur in a Presidential declared disaster area.