My car was destroyed in 2012, parked hit and run. I had liability insurance, but the insurance company said that they could not find the other car owner. The total value of the car was around $6,000. Can I claim a lose on my return this year because I did not get any money from insurance?

ANSWER

The BIDaWIZ Team's Answer:

The short answer is that generally you must claim casualty losses in the year when the loss is incurred. In this case, it would be in 2012. You could amend your 2012 return to claim the loss. Specifically, you may claim the loss as a casualty loss since the incident was no fault of your own as per IRC Section 165(h) and IRS Publication 547. The application of the law to auto accidents is addressed at Treasury Regulation 1.165-7. This regulation provides that the loss associated with an auto accident is a casualty loss as long as the damage is not due to the willful act or willful negligence of you. The amount of the loss is the smaller of the amount you paid for the car or the decrease in the fair market value of the car as a result of the accident, reduced by reimbursements received by insurance. If the accident meets the definition of a casualty then the loss calculated above is claimed as an itemized deduction on Schedule A of Form 1040. The amount of the deduction is limited to the amount of the loss in excess of 10% of adjusted gross income as well as a $100 reduction. You will also complete Form 4684.

References: IRC Section 165(h) and IRS Publication 547
State: New York