• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

Tragic losses - Are they casualty?

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

jeffk8

Junior Member
What is the name of your state?What is the name of your state? Alabama

Hello,

Because of family end-of-life medical issues and a horrendous string of tragic events, I am just now filing taxes for this year. So many events have happened to-date that the intensity of the year made me unconsciously forget filing although an initial extension was filed. I am very frustrated and unhappy. Last year and this year have been a trememdous financial burden.

This is a multiple question / situations and I appreciate any help I can get.

My wife and I were given a mint condition 1985 Mecury Marquis, fully loaded, with only 36,000 miles. We had to have a second car to support family medical issues and to have for emergencies. My wife does not work because of her conditions.

Anyway in April, 2003, I was driving the car home and thought I hit a clump of white mud because I heard a soft thump and what looked like dust from what I thought was a clump of dirt. Many dump trucks use the country roads carrying dirt for their jobs. 5 miles down the road, the car made a brief knocking sound and the engine quit almost instantly. No noise, no warning lights, no smoke, no steam, nothing! I take care of my property and we have to take care of things we own.

The Mecury was towed and the mechanics found that the engine block was cracked. Further, they said it was a freak situation. The freeze plug had popped off (we never really get freezing conditions and it was in the 60s) and it was the reason I did not see any steam or smoke. The water was drained more quickly that I would have noticed. I could not afford a new engine and I was willing to donate the vehicle.

Is this a casualty loss for me? I only had liability insurance. It is something I could have never anticipated, nor anyone else.

In September of 2003 we had a massive hail storm. The storm totalled our remaining vehicle and only liabiliy on it. The insurance company had to set up a remote office in a van for this rural area because so many cars were totalled or severely damaged.

We were forced to get another vehicle and we had to buy a used car.

The tragic incidents did not stop. 4 days before getting another car, we had to have gravel put in the driveway because our weather was washing furrows in the drive. Two days after getting the car, I was backing out and the gravel shifted, causing the bumper to get caught on a tree stump. Repairs for the seemingly insignificant bumper was $550. Of course we were required to have a more comprehensive insurance since we were making payments, but the deductible is $1000.

Are all of my incidents casualty losses? If so, does the purchase of another vehicle, because of casualties become part of the costs of casualty?

I really appreciate a site like this and I apprecaite any information and help anyone can afford me.

I do not know if my email address shows up in my profile, but it is:

[email protected]

Thank you very much,

Jeff
 


abezon

Senior Member
1. Cracked engine block: probably not. A casualty loss is a loss caused by a sudden, unexpected or unusual event. Progressive deterioration is not a casualty; an accident is. The issue for the engine block is whether this was a sudden event. If the drain plug popped off & the engine cracked 5 miles later, you might be able to sustain a claim of casualty loss. The IRS would probably take the position that this was lack of maintainence & not a casualty.

2. Hail storm: Casualty loss.

3. Tree stump: Casualty loss.

Your loss is the decrease in FMV (usually the cost of repairs) before & after the accident. For each event, you reduce the loss by a $100 "deductible". Then you add the remaining losses and reduce that total by 10% of your AGI. IF there is any loss left, you get to deduct that amount on Sch.A.

References: Form 4684. Pub 547, 584
 

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top