When can a taxpayer deduct a casualty loss?

A taxpayer can deduct a casualty loss during the year when the casualty event occurred or when the theft was discovered. This means that for tax purposes, the timing of the loss is crucial. If a taxpayer experiences damage to their property due to a natural disaster or a theft occurs, the deductible loss is recognized in the tax year that the loss actually took place or was realized.

This principle is rooted in tax law where the loss is tied to the event that caused it, ensuring that taxpayers accurately reflect their financial situation in the year those impacts were felt. Therefore, when it comes to casualty losses, it is essential for taxpayers to know that the potential deduction hinges on the specific timing of the event rather than any subsequent assessments or repairs. This emphasizes the importance of documenting such events as they occur to support any future claims on tax returns.