Is damage due to termite or moth infestation deductible as a casualty loss?

The correct answer is that damage due to termite or moth infestation is not considered a qualifying casualty loss. For losses to qualify as casualty losses under the tax code, they must arise from sudden, unexpected, and identifiable events such as storms, fires, or accidents.

Termite or moth infestations, on the other hand, typically result from gradual deterioration or ongoing pest problems, which do not meet the criteria of being sudden or unexpected. The IRS distinguishes these kinds of losses from those caused by genuine casualties. The nature of infestations is more about long-term maintenance issues rather than unforeseen events that result in damage. Thus, expenses and damages arising from infestations are generally seen as part of home maintenance, not casualties, and are not deductible under the IRS rules related to casualty losses.

The other options suggest that there may be circumstances under which these infestations could be eligible for deduction, but the core requirement of suddenness for a loss to qualify as a casualty loss is not met, solidifying that such infestations do not qualify as deductible casualty losses.