Forms: Form 1099B
Final rules 9
(a) General rule There shall be allowed as a deduction any loss sustained during the taxable year and not compensated for by insurance or otherwise.
(b) Amount of deduction For purposes of subsection (a), the basis for determining the amount of the deduction for any loss shall be the adjusted basis provided in section 1011 for determining the loss from the sale or other disposition of property.
(c) Limitation on losses of individuals In the case of an individual, the deduction under subsection (a) shall be limited to—
(1) losses incurred in a trade or business;
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(2) losses incurred in any transaction entered into for profit, though not connected with a trade or business; and
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(3) except as provided in subsection (h), losses of property not connected with a trade or business or a transaction entered into for profit, if such losses arise from fire, storm, shipwreck, or other casualty, or from theft.
Amended 1964, 1982, 1984
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 711(c)(2)(A)(i), extended limitation to losses of property not connected with a transaction entered into for profit.
- 1982 Pub. L. 97-248 Pub. L. 97–248, § 203(b), inserted “except as provided in subsection (h),” before “losses of property” and struck out provisions that a loss described in this paragraph would be allowed only to the extent that the amount of loss to such individual arising from each casualty, or from each theft, exceeded $100, that, for purposes of the $100 limitation, a husband and wife making a joint return under section 6013 for the taxable year in which the loss was allowed as a deduction would be treated as one individual, and that no loss described in this paragraph would be allowed if, at the time of filing the return, such loss had been claimed for estate tax purposes in the estate tax return.
- 1964 Pub. L. 88-272 Pub. L. 88–272, § 208(a), inserted requirement that losses must exceed $100 to be deductible.
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(d) Wagering losses
Amended 2017, 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70114(a), added subsec. (d) and struck out former subsec. (d). Prior to amendment, text read as follows: “Losses from wagering transactions shall be allowed only to the extent of the gains from such transactions. For purposes of the preceding sentence, in the case of taxable years beginning after December 31, 2017, and before January 1, 2026, the term ‘losses from wagering transactions’ includes any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction.”
- 2017 Pub. L. 115-97 Pub. L. 115–97, § 11050(a), inserted at end “For purposes of the preceding sentence, in the case of taxable years beginning after December 31, 2017, and before January 1, 2026, the term ‘losses from wagering transactions’ includes any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction.”
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(1) In general For purposes of losses from wagering transactions, the amount allowed as a deduction for any taxable year—
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(A) shall be equal to 90 percent of the amount of such losses during such taxable year, and
(B) shall be allowed only to the extent of the gains from such transactions during such taxable year.
(2) Special rule For purposes of paragraph (1), the term “losses from wagering transactions” includes any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction.
(e) Theft losses For purposes of subsection (a), any loss arising from theft shall be treated as sustained during the taxable year in which the taxpayer discovers such loss.
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(f) Capital losses Losses from sales or exchanges of capital assets shall be allowed only to the extent allowed in sections 1211 and 1212.
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(g) Worthless securities
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(1) General rule If any security which is a capital asset becomes worthless during the taxable year, the loss resulting therefrom shall, for purposes of this subtitle, be treated as a loss from the sale or exchange, on the last day of the taxable year, of a capital asset.
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(2) Security defined For purposes of this subsection, the term “security” means—
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(A) a share of stock in a corporation;
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(B) a right to subscribe for, or to receive, a share of stock in a corporation; or
(C) a bond, debenture, note, or certificate, or other evidence of indebtedness, issued by a corporation or by a government or political subdivision thereof, with interest coupons or in registered form.
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(3) Securities in affiliated corporation For purposes of paragraph (1), any security in a corporation affiliated with a taxpayer which is a domestic corporation shall not be treated as a capital asset. For purposes of the preceding sentence, a corporation shall be treated as affiliated with the taxpayer only if—
Amended 1971, 2000
- 2000 Pub. L. 106-554 Pub. L. 106–554, § 1(a)(7) [title III, § 318(b)(2)], struck out last sentence of concluding provisions which read as follows: “As used in subparagraph (A), the term ‘stock’ does not include nonvoting stock which is limited and preferred as to dividends.”
- 1971 Pub. L. 91-687 Pub. L. 91–687 substituted “stock possessing at least 80 percent of the voting power of all classes of its stock and at least 80 percent of each class of its nonvoting stock” for “at least 95 percent of each class of its stock” in subpar. (A), and inserted at the end of the subsection the sentence providing that the term “stock”, as used in subpar. (A), does not include nonvoting stock which is limited and preferred as to dividends.
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(A) the taxpayer owns directly stock in such corporation meeting the requirements of section 1504(a)(2), and
Amended 2000
- 2000 Pub. L. 106-554 Pub. L. 106–554, § 1(a)(7) [title III, § 318(b)(1)], amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “stock possessing at least 80 percent of the voting power of all classes of its stock and at least 80 percent of each class of its nonvoting stock is owned directly by the taxpayer, and”.
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(B) more than 90 percent of the aggregate of its gross receipts for all taxable years has been from sources other than royalties, rents (except rents derived from rental of properties to employees of the corporation in the ordinary course of its operating business), dividends, interest (except interest received on deferred purchase price of operating assets sold), annuities, and gains from sales or exchanges of stocks and securities.
Amended 1958
- 1958 Pub. L. 85-866 Pub. L. 85–866, § 7, substituted “rental of” for “rental from”.
In computing gross receipts for purposes of the preceding sentence, gross receipts from sales or exchanges of stocks and securities shall be taken into account only to the extent of gains therefrom.
(h) Treatment of casualty gains and losses
Amended 1962, 1972, 1974, 1982, 1984
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 711(c)(2)(A)(ii), substituted heading “Treatment of casualty gains and losses” for “Casualty and theft losses”; substituted par. (1) “$100 limitation per casualty” provision for former par. (1) “General rule” provision stating that: “Any loss of an individual described in subsection (c)(3) shall be allowed for any taxable year only to the extent that—
“(A) the amount of loss to such individual arising from each casualty, or from each theft, exceeds $100, and
“(B) the aggregate amount of all such losses sustained by such individual during the taxable year (determined after application of subparagraph (A) exceeds 10 percent of the adjusted gross income of the individual.”;
added par. (2) “Net casualty loss allowed only to the extent it exceeds 10 percent of adjusted gross income” provision and par. (3) “Definitions of personal casualty gain and personal casualty loss” provisions; redesignated as par. (4) former par. (2) catchline; added par. (4)(A) “Personal casualty losses allowable in computing adjusted gross income to the extent of personal casualty gains” provision; redesignated as par. (4)(B) former par. (2)(A) joint returns provision, substituting “For purposes of this section” for “For purposes of the $100 and 10 percent limitations described in paragraph (1)” and “individual” for “one individual”; redesignated as par. (4)(C) former par. (2)(B), substituting therein paragraph “(2)” for “(1)”; and redesignated as par. (4)(D) former par. (2)(C).
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 711(c)(1), amended par. (2) by redesignating subpar. (B) as (C) and by adding a new subpar. (B) relating to the determination of adjusted gross income in case of estates and trusts.
- 1982 Pub. L. 97-248 Pub. L. 97–248, § 203(a), added subsec. (h) relating to casualty and theft losses. Former subsec. (h), relating to disaster losses, redesignated (i).
- 1974 Pub. L. 93-288 Pub. L. 93–288 substituted “Disaster Relief Act of 1974” for “Disaster Relief Act of 1970”.
- 1972 Pub. L. 92-418 Pub. L. 92–418 struck out par. (1) provisions relating to losses attributable to a disaster occurring during period following close of taxable year and on or before time prescribed by law for filing the income tax return for the taxable year without regard to any extension of time, struck out par. (2) designation, and inserted “attributable to a disaster” before “occurring in an area”, and at end of second sentence, inserted “based on facts existing at the date the taxpayer claims the loss”.
- 1962 Pub. L. 87-426 Pub. L. 87–426 added subsec. (h) and redesignated former subsec. (h) as (i).
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(1) Dollar limitation per casualty Any loss of an individual described in subsection (c)(3) shall be allowed only to the extent that the amount of the loss to such individual arising from each casualty, or from each theft, exceeds $100 ($500 in the case of any qualified disaster-related personal casualty losses (as defined in paragraph (6)(C)) [OLRC note: So in original. Another closing parenthesis probably should appear.] .
Amended 1972, 2008, 2014, 2026
- 2026 Pub. L. 119-108 Pub. L. 119–108, § 2(b), substituted “$100 ($500 in the case of any qualified disaster-related personal casualty losses (as defined in paragraph (6)(C))” for “$500 ($100 for taxable years beginning after December 31, 2009)”.
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 211(c)(1)(C), substituted “Dollar” for “$100” in heading.
- 2008 Pub. L. 110-343 Pub. L. 110–343, § 706(c), substituted “$500 ($100 for taxable years beginning after December 31, 2009)” for “$100”.
- 1972 Pub. L. 92-336 Pub. L. 92–336 substituted provisions relating to losses attributable to a disaster which occurs during the period after the close of the taxable year and on or before the last day of the 6th calendar month beginning after the close of the taxable year, for provisions relating to losses attributable to a disaster which occurs during the period following the close of the taxable year and on or before the time prescribed by law for filing the income tax return for the taxable year, determined without regard to any extension of time.
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(2) Net casualty loss allowed only to the extent it exceeds 10 percent of adjusted gross income
Amended 1970
- 1970 Pub. L. 91-606 Pub. L. 91–606 substituted “the Disaster Relief Act of 1970” for “sections 1855–1855g of title 42”.
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(A) In general If the personal casualty losses for any taxable year exceed the personal casualty gains for such taxable year, such losses shall be allowed for the taxable year only to the extent of the sum of—
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(i) the amount of the personal casualty gains for the taxable year, plus
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(ii) so much of such excess as exceeds 10 percent of the adjusted gross income of the individual.
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(B) Special rule where personal casualty gains exceed personal casualty losses If the personal casualty gains for any taxable year exceed the personal casualty losses for such taxable year—
(i) all such gains shall be treated as gains from sales or exchanges of capital assets, and
(ii) all such losses shall be treated as losses from sales or exchanges of capital assets.
(3) Definitions of personal casualty gain and personal casualty loss For purposes of this subsection—
Amended 1958, 2008, 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(27)(A), redesignated par. (4) as (3) and struck out former par. (3) which related to special rule for losses in federally declared disasters.
- 2008 Pub. L. 110-343 Pub. L. 110–343, § 706(a)(1), added par. (3). Former par. (3) redesignated (4).
- 1958 Pub. L. 85-866 Pub. L. 85–866, § 57(c)(1), added pars. (3) and (4).
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(A) Personal casualty gain The term “personal casualty gain” means the recognized gain from any involuntary conversion of property which is described in subsection (c)(3) arising from fire, storm, shipwreck, or other casualty, or from theft.
(B) Personal casualty loss The term “personal casualty loss” means any loss described in subsection (c)(3). For purposes of paragraph (2), the amount of any personal casualty loss shall be determined after the application of paragraph (1).
Amended 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(27)(B), substituted “paragraph (2)” for “paragraphs (2) and (3)”.
(4) Special rules
Amended 1958, 2008, 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(27)(A), redesignated par. (5) as (4). Former par. (4) redesignated (3).
- 2008 Pub. L. 110-343 Pub. L. 110–343, § 706(a)(1), redesignated par. (3) as (4). Former par. (4) redesignated (5).
- 1958 Pub. L. 85-866 Pub. L. 85–866, § 57(c)(1), added pars. (3) and (4).
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(A) Personal casualty losses allowable in computing adjusted gross income to the extent of personal casualty gains In any case to which paragraph (2)(A) applies, the deduction for personal casualty losses for any taxable year shall be treated as a deduction allowable in computing adjusted gross income to the extent such losses do not exceed the personal casualty gains for the taxable year.
(B) Joint returns For purposes of this subsection, a husband and wife making a joint return for the taxable year shall be treated as 1 individual.
Amended 2008
- 2008 Pub. L. 110-343 Pub. L. 110–343, § 706(a)(2)(A), substituted “paragraphs (2) and (3)” for “paragraph (2)”.
(C) Determination of adjusted gross income in case of estates and trusts For purposes of paragraph (2), the adjusted gross income of an estate or trust shall be computed in the same manner as in the case of an individual, except that the deductions for costs paid or incurred in connection with the administration of the estate or trust shall be treated as allowable in arriving at adjusted gross income.
(D) Coordination with estate tax No loss described in subsection (c)(3) shall be allowed if, at the time of filing the return, such loss has been claimed for estate tax purposes in the estate tax return.
(E) Claim required to be filed in certain cases Any loss of an individual described in subsection (c)(3) to the extent covered by insurance shall be taken into account under this section only if the individual files a timely insurance claim with respect to such loss.
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1004(a), added subpar. (E).
(5) Limitation for taxable years beginning after 2017
Amended 1958, 2008, 2014, 2017, 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70109(a)(2), substituted “beginning after 2017” for “2018 through 2025” in heading.
- 2017 Pub. L. 115-97 Pub. L. 115–97, § 11044(a), added par. (5).
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(27)(A), redesignated par. (5) as (4). Former par. (4) redesignated (3).
- 2008 Pub. L. 110-343 Pub. L. 110–343, § 706(a)(1), redesignated par. (4) as (5).
- 1958 Pub. L. 85-866 Pub. L. 85–866, § 202(a), added par. (5).
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(A) In general In the case of an individual, except as provided in subparagraph (B), any personal casualty loss which (but for this paragraph) would be deductible in a taxable year beginning after December 31, 2017, shall be allowed as a deduction under subsection (a) only to the extent it is attributable to a Federally declared disaster (as defined in subsection (i)(5)) or a State declared disaster.
Amended 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70109(b)(1), substituted “(i)(5)) or a State declared disaster” for “(i)(5))”.
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70109(a)(1), struck out “, and before January 1, 2026” after “December 31, 2017”.
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(B) Exception related to personal casualty gains If a taxpayer has personal casualty gains for any taxable year to which subparagraph (A) applies—
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(i) subparagraph (A) shall not apply to the portion of the personal casualty loss not attributable to a Federally declared disaster (as so defined) or a State declared disaster to the extent such loss does not exceed such gains, and
Amended 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70109(b)(2), substituted “(as so defined) or a State declared disaster” for “(as so defined)”.
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(ii) in applying paragraph (2) for purposes of subparagraph (A) to the portion of personal casualty loss which is so attributable to such a disaster, the amount of personal casualty gains taken into account under paragraph (2)(A) shall be reduced by the portion of such gains taken into account under clause (i).
(C) State declared disaster For purposes of this paragraph—
Amended 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21, § 70109(b)(3), added subpar. (C).
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(i) In general The term “State declared disaster” means, with respect to any State, any natural catastrophe (including any hurricane, tornado, storm, high water, wind-driven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, or drought), or, regardless of cause, any fire, flood, or explosion, in any part of the State, which in the determination of the Governor of such State (or the Mayor, in the case of the District of Columbia) and the Secretary causes damage of sufficient severity and magnitude to warrant the application of the rules of this section.
(ii) State The term “State” includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands.
(6) Special rule for qualified net disaster losses
Amended 2026
- 2026 Pub. L. 119-108 Pub. L. 119–108, § 2(a), added par. (6).
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(A) In general If an individual has a qualified net disaster loss for any taxable year, the amount determined under paragraph (2)(A)(ii) shall be the sum of—
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(i) such qualified net disaster loss, and
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(ii) so much of the excess referred to in the matter preceding clause (i) of paragraph (2)(A) (reduced by the amount in clause (i) of this subparagraph) as exceeds 10 percent of the adjusted gross income of the individual.
(B) Qualified net disaster loss For purposes of subparagraph (A), the term “qualified net disaster loss” means the excess (if any) of—
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(ii) personal casualty gains reduced by the portion of such gains taken into account under paragraph (5)(B)(i).
(C) Qualified disaster-related personal casualty losses For purposes of this paragraph—
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(i) In general The term “qualified disaster-related personal casualty losses” means losses described in subsection (c)(3) (determined after application of paragraph (1)) which arise in a qualified disaster area on or after the first day of the incident period of the qualified disaster to which such area relates, and which are attributable to such disaster.
(ii) Qualified disaster area The term “qualified disaster area” means any area with respect to which a major disaster has been declared by the President under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act if the incident period of the disaster with respect to which such declaration is made begins on or after December 28, 2019, and before January 1, 2027.
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(iii) Qualified disaster The term “qualified disaster” means, with respect to any qualified disaster area, the disaster by reason of which a major disaster was declared with respect to such area.
(iv) Incident period The term “incident period” means, with respect to any qualified disaster, the period specified by the Federal Emergency Management Agency as the period during which such disaster occurred.
(i) Disaster losses
Amended 1962, 1964, 1976, 1982
- 1982 Pub. L. 97-248 Pub. L. 97–248, § 203(a), redesignated former subsec. (h), relating to disaster losses, as (i), in subsec. (i), as so redesignated, further redesignated existing unnumbered provisions as pars. (1) and (2), in par. (1), as so redesignated, substituted “be taken into account for the taxable year” for “be deducted for the taxable year”, in par. (2), as so redesignated, substituted “shall be treated for purposes of this title as having occurred” for “will be deemed to have occurred”, added par. (3), and struck out provision that a deduction under this subsection could not be in excess of so much of the loss as would have been deductible in the taxable year in which the casualty occurred, based on facts existing at the date the taxpayer claimed the loss. Former subsec. (i), setting forth cross references, redesignated (j).
- 1976 Pub. L. 94-455 Pub. L. 94–455 redesignated subsec. (j) as subsec. (i). Former subsec. (i), which related to property confiscated by Cuba, was struck out.
- 1964 Pub. L. 88-348 Pub. L. 88–348 designated existing provisions as par. (1), substituted provisions permitting individuals who were citizens of the United States or resident aliens on Dec. 31, 1958, who sustained any loss of property prior to Jan. 1, 1964, and which was not a loss described in par. (1) or (2) of subsec. (c), to treat such loss as a loss under subsec. (c)(3), except that in cases of tangible property, the property had to be held by the taxpayer, and located in Cuba, on Dec. 31, 1958, for provisions which permitted any loss of tangible property to be treated as a loss from a casualty within subsec. (c)(3), therein, and added pars. (2) and (3).
- 1964 Pub. L. 88-272 Pub. L. 88–272, § 238, added subsec. (i). Former subsec. (i) redesignated (j).
- 1962 Pub. L. 87-426 Pub. L. 87–426 added subsec. (h) and redesignated former subsec. (h) as (i).
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(1) Election to take deduction for preceding year Notwithstanding the provisions of subsection (a), any loss occurring in a disaster area and attributable to a federally declared disaster may, at the election of the taxpayer, be taken into account for the taxable year immediately preceding the taxable year in which the disaster occurred.
Amended 1971, 1988, 2004, 2008, 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(27)(C)(i), struck out “(as defined by clause (ii) of subsection (h)(3)(C))” after “disaster area” and “(as defined by clause (i) of such subsection)” after “federally declared disaster”.
- 2008 Pub. L. 110-343 Pub. L. 110–343, § 706(a)(2)(B), substituted “loss occurring in a disaster area (as defined by clause (ii) of subsection (h)(3)(C)) and attributable to a federally declared disaster (as defined by clause (i) of such subsection)” for “loss attributable to a disaster occurring in an area subsequently determined by the President of the United States to warrant assistance by the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act”.
- 2004 Pub. L. 108-311 Pub. L. 108–311 inserted “Robert T. Stafford” before “Disaster Relief and Emergency Assistance Act”.
- 1988 Pub. L. 100-707 Pub. L. 100–707 substituted “and Emergency Assistance Act” for “Act of 1974”.
- 1971 Pub. L. 91-677 Pub. L. 91–677, § 1(a)(1), (2), struck out “or (2)” after “paragraph (1)” in cl. (B), and substituted “one or more days in the period beginning on December 31, 1958, and ending on May 16, 1959” for “December 31, 1958”.
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(2) Year of loss If an election is made under this subsection, the casualty resulting in the loss shall be treated for purposes of this title as having occurred in the taxable year for which the deduction is claimed.
Amended 1971
- 1971 Pub. L. 91-677 Pub. L. 91–677, § 1(a)(3), substituted “one or more days during the period beginning on December 31, 1958, and ending on May 16, 1959” for “December 31, 1958” and “the first day in such period on which the property was held by the taxpayer” for “December 31, 1958”.
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(3) Amount of loss The amount of the loss taken into account in the preceding taxable year by reason of paragraph (1) shall not exceed the uncompensated amount determined on the basis of the facts existing at the date the taxpayer claims the loss.
Amended 1971
- 1971 Pub. L. 91-677 Pub. L. 91–677, § 1(a)(4), struck out subsec. (i)(3) which authorized a refund or credit to be given for any overpayment attributable to the application of par. (1), provided that a claim was filed for such refund or credit before Jan. 1, 1965.
(4) Use of disaster loan appraisals to establish amount of loss Nothing in this title shall be construed to prohibit the Secretary from prescribing regulations or other guidance under which an appraisal for the purpose of obtaining a loan of Federal funds or a loan guarantee from the Federal Government as a result of a federally declared disaster may be used to establish the amount of any loss described in paragraph (1) or (2).
Amended 1997, 2008, 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(27)(C)(ii), struck out “(as defined by subsection (h)(3)(C)(i)” after “federally declared disaster”.
- 2008 Pub. L. 110-343 Pub. L. 110–343, § 706(a)(2)(C), substituted “federally declared disaster (as defined by subsection (h)(3)(C)(i)” for “Presidentially declared disaster (as defined by section 1033(h)(3))”.
- 1997 Pub. L. 105-34 Pub. L. 105–34 added par. (4).
(5) Federally declared disasters For purposes of this subsection—
Amended 2014
- 2014 Pub. L. 113-295 Pub. L. 113–295, § 221(a)(27)(C)(iii), added par. (5).
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(A) In general The term “Federally [OLRC note: So in original. Probably should not be capitalized.] declared disaster” means any disaster subsequently determined by the President of the United States to warrant assistance by the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.
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(B) Disaster area The term “disaster area” means the area so determined to warrant such assistance.
(j) Denial of deduction for losses on certain obligations not in registered form
Amended 1964, 1976, 1982
- 1982 Pub. L. 97-248 Pub. L. 97–248, § 310(b)(5), added subsec. (j) relating to denial of deduction for losses on certain obligations not in registered form. Former subsec. (j), setting forth cross references, redesignated (k).
- 1982 Pub. L. 97-248 Pub. L. 97–248, § 203(a), redesignated former subsec. (i), setting forth cross references, as (j).
- 1976 Pub. L. 94-455 Pub. L. 94–455 redesignated subsec. (j) as subsec. (i). Former subsec. (i), which related to property confiscated by Cuba, was struck out.
- 1964 Pub. L. 88-272 Pub. L. 88–272, § 238, redesignated former subsec. (i) as (j).
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(1) In general Nothing in subsection (a) or in any other provision of law shall be construed to provide a deduction for any loss sustained on any registration-required obligation unless such obligation is in registered form (or the issuance of such obligation was subject to tax under section 4701).
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(2) Definitions For purposes of this subsection—
(A) Registration-required obligation The term “registration-required obligation” has the meaning given to such term by section 163(f)(2).
Amended 2010
- 2010 Pub. L. 111-147 Pub. L. 111–147 struck out “except that clause (iv) of subparagraph (A), and subparagraph (B), of such section shall not apply” before period.
(B) Registered form The term “registered form” has the same meaning as when used in section 163(f).
(3) Exceptions The Secretary may, by regulations, provide that this subsection and section 1287 shall not apply with respect to obligations held by any person if—
Amended 1984
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 42(a)(4), substituted “section 1287” for “subsection (d) of section 1232”.
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(A) such person holds such obligations in connection with a trade or business outside the United States,
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(B) such person holds such obligations as a broker dealer (registered under Federal or State law) for sale to customers in the ordinary course of his trade or business,
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(C) such person complies with reporting requirements with respect to ownership, transfers, and payments as the Secretary may require, or
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(D) such person promptly surrenders the obligation to the issuer for the issuance of a new obligation in registered form,
but only if such obligations are held under arrangements provided in regulations or otherwise which are designed to assure that such obligations are not delivered to any United States person other than a person described in subparagraph (A), (B), or (C).
(k) Treatment as disaster loss where taxpayer ordered to demolish or relocate residence in disaster area because of disaster In the case of a taxpayer whose residence is located in an area which has been determined by the President of the United States to warrant assistance by the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, if—
Amended 1982, 1984, 1988, 2004
- 2004 Pub. L. 108-311 Pub. L. 108–311 inserted “Robert T. Stafford” before “Disaster Relief and Emergency Assistance Act”.
- 1988 Pub. L. 100-707 Pub. L. 100–707 substituted “and Emergency Assistance Act” for “Act of 1974”.
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 1051(a), added subsec. (k) and redesignated former subsec. (k) as (l).
- 1982 Pub. L. 97-248 Pub. L. 97–248, § 310(b)(5), redesignated former subsec. (j), setting forth cross references, as (k).
Research 1
(1) not later than the 120th day after the date of such determination, the taxpayer is ordered, by the government of the State or any political subdivision thereof in which such residence is located, to demolish or relocate such residence, and
(2) the residence has been rendered unsafe for use as a residence by reason of the disaster,
any loss attributable to such disaster shall be treated as a loss which arises from a casualty and which is described in subsection (i).
(l) Treatment of certain losses in insolvent financial institutions
Amended 1984, 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 905(a), added subsec. (l) and redesignated former subsec. (l) as (m).
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 1051(a), added subsec. (k) and redesignated former subsec. (k) as (l).
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(1) In general If—
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(A) as of the close of the taxable year, it can reasonably be estimated that there is a loss on a qualified individual’s deposit in a qualified financial institution, and
(B) such loss is on account of the bankruptcy or insolvency of such institution,
then the taxpayer may elect to treat the amount so estimated as a loss described in subsection (c)(3) incurred during the taxable year.
(2) Qualified individual defined For purposes of this subsection, the term “qualified individual” means any individual, except an individual—
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(A) who owns at least 1 percent in value of the outstanding stock of the qualified financial institution,
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(B) who is an officer of the qualified financial institution,
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(C) who is a sibling (whether by the whole or half blood), spouse, aunt, uncle, nephew, niece, ancestor, or lineal descendant of an individual described in subparagraph (A) or (B), or
(D) who otherwise is a related person (as defined in section 267(b)) with respect to an individual described in subparagraph (A) or (B).
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(3) Qualified financial institution For purposes of this subsection, the term “qualified financial institution” means—
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(A) any bank (as defined in section 581),
(B) any institution described in section 591,
(C) any credit union the deposits or accounts in which are insured under Federal or State law or are protected or guaranteed under State law, or
(D) any similar institution chartered and supervised under Federal or State law.
(4) Deposit For purposes of this subsection, the term “deposit” means any deposit, withdrawable account, or withdrawable or repurchasable share.
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(5) Election to treat as ordinary loss
Amended 1988
- 1988 Pub. L. 100-647 Pub. L. 100–647 added pars. (5) and (6), redesignated former par. (6) as (7), and struck out former par. (5) which read as follows: “Election.—Any election by the taxpayer under this subsection may be revoked only with the consent of the Secretary and shall apply to all losses of the taxpayer on deposits in the institution with respect to which such election was made.”
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(A) In general In lieu of any election under paragraph (1), the taxpayer may elect to treat the amount referred to in paragraph (1) for the taxable year as an ordinary loss described in subsection (c)(2) incurred during the taxable year.
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(B) Limitations
(i) Deposit may not be federally insured No election may be made under subparagraph (A) with respect to any loss on a deposit in a qualified financial institution if part or all of such deposit is insured under Federal law.
(ii) Dollar limitation With respect to each financial institution, the aggregate amount of losses attributable to deposits in such financial institution to which an election under subparagraph (A) may be made by the taxpayer for any taxable year shall not exceed $20,000 ($10,000 in the case of a separate return by a married individual). The limitation of the preceding sentence shall be reduced by the amount of any insurance proceeds under any State law which can reasonably be expected to be received with respect to losses on deposits in such institution.
(6) Election Any election by the taxpayer under this subsection for any taxable year—
Amended 1988
- 1988 Pub. L. 100-647 Pub. L. 100–647 added pars. (5) and (6), redesignated former par. (6) as (7), and struck out former par. (5) which read as follows: “Election.—Any election by the taxpayer under this subsection may be revoked only with the consent of the Secretary and shall apply to all losses of the taxpayer on deposits in the institution with respect to which such election was made.”
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(A) shall apply to all losses for such taxable year of the taxpayer on deposits in the institution with respect to which such election was made, and
(B) may be revoked only with the consent of the Secretary.
(7) Coordination with section 166 Section 166 shall not apply to any loss to which an election under this subsection applies.
Amended 1988
- 1988 Pub. L. 100-647 Pub. L. 100–647 added pars. (5) and (6), redesignated former par. (6) as (7), and struck out former par. (5) which read as follows: “Election.—Any election by the taxpayer under this subsection may be revoked only with the consent of the Secretary and shall apply to all losses of the taxpayer on deposits in the institution with respect to which such election was made.”
(m) Cross references
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 905(a), added subsec. (l) and redesignated former subsec. (l) as (m).
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(1) For special rule for banks with respect to worthless securities, see section 582.
(2) For disallowance of deduction for worthlessness of securities to which subsection (g)(2)(C) applies, if issued by a political party or similar organization, see section 271.
(3) For special rule for losses on stock in a small business investment company, see section 1242.
(4) For special rule for losses of a small business investment company, see section 1243.
(5) For special rule for losses on small business stock, see section 1244.