Esther owns a large home on the East Coast. Her home is surrounded by large, mature oak trees that significantly increase the value of her home. In August 2015, a hurricane damaged many of the trees surrounding her home. In September 2015, Esther engaged a local arborist to evaluate and treat the trees, but five of the largest trees were seriously weakened by the storm. These trees died from disease in 2016. Esther has ascertained that the amount of the casualty loss from the death of the five trees is $25,000; however, she is uncertain in which year to deduct this loss. Discus whether the casualty loss should be deducted in the calculation of Esther's 2015 or 2016 taxable income.
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Casualty losses are deductible in the year the causality occurred. So, if the trees died in 2016, the causality loss should be deductible in the year 2016 (b). This is the normal situation.
However, if there ...
This posting gives you a step-by-step explanation of claiming causality loss from taxable income. The response also contains the sources used.