Which of the following best describes a casualty in tax terms?

A casualty, in tax terms, is best described as a loss that arises from events that are sudden and unexpected. This definition is crucial because it aligns with the IRS guidelines regarding deductible casualty losses. These losses often stem from natural disasters, accidents, or other unforeseen occurrences that result in physical damage to property.

For a loss to qualify as a casualty under tax regulations, it must not be a result of wear and tear or normal market fluctuations, which often characterize predictable or anticipated changes in value. Events like a hurricane, theft, or an accident causing damage qualify as casualties specifically because they are abrupt and out of the ordinary, leading to an immediate and often significant impact on property value. This is what sets casualty losses apart from other types of losses, such as those resulting from inadequate upkeep or predictable declines in property market values.