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Income Tax Blog > Income Tax Tips > Tips On Deductible Losses Tips On Deductible Losses - Tax Deduction
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If your business property is damaged, destroyed, or lost because of storm, earthquake, flood, or some other sudden, unexpected or unusual event, you have a casualty loss. These losses your business received from events declared to be federal disasters, may even allow you to recover taxes you have already paid in an earlier year.
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Any loss resulted from an act of robbery, larceny or embezzlement against your business can be deductible.
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If you are forced to pay extortion money or blackmail in the course of your business, the loss may be treated as a theft loss.
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If you own a business property and dispose of it for an amount that is less than your basis in the property, you may realize a loss.
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If you suffer casualty or theft losses to your business property, you can deduct the loss.
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You may also suffer a loss through condemnation or a sale under threat of condemnation, again the loss is deductible.
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If your corporation realizes capital losses, they can only be deducted against capital gains. Any capital losses in excess of capital gains can be carried back for three years, then for five years.
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If you dispose of property in some way other than a sale or exchange, gain or loss generally is treated as ordinary gain or loss.
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If the property is foreclosed on or repossessed, your loss may be a capital loss.
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You cannot deduct losses on sales or exchanges of property between related parties. Some of the related parties include: spouses, siblings, parents, grandparents, grand children, a controlled entity in which you own more than 50 percent of the value.
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Loss on a security that becomes worthless is treated as a capital loss. If the stock is a Section 1244 stock, you can claim an ordinary loss deduction.
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