A casualty loss has to do with the loss of property through a set of circumstances that are unanticipated. In many instances, a casualty loss comes about due to some sort of natural disaster. In other situations, a casualty loss occurs as a result of some sort of accident. Both individuals and businesses may claim a casualty loss on annual tax returns, if the circumstances surrounding the loss meet the qualifications relative to the deduction.
One of the more common reasons for claiming a casualty loss are the result of some sort of natural disaster. Property, such as buildings, vehicles, farming land, and other physical assets that are used as part of the operation of a business for profit, may be partially damaged or completely destroyed. Just about any type of natural phenomenon can be involved in the declaration of a casualty loss. Floods, tornadoes and hurricanes, lighting storms, or earthquakes could all set the stage for the destruction of property and the proper claim of a casualty loss.
Along with natural disasters, a casualty loss can also result from some sort of accident and even a deliberate illegal act. Vehicles used for business purposes and are damaged during usual and standard use can be claimed as a casualty loss. In the event that a business vehicle is stolen and is subsequently totaled in an accident may also qualify for designation as a casualty loss as well.
Fires at business facilities also often qualify as a casualty loss. In the event that a plant, business office, or other company related facility is the victim of arson or is destroyed by fire due to an unforeseen issue, the company may be allowed to deduct the value of the facility as a casualty loss for the current calendar year.
While several nations recognize the concept of casualty loss, the exact definition for what constitutes this type of financial loss may vary somewhat from one country to another. National revenue agencies usually provide information about the recognition of a casualty loss, as well as specific forms that must be used in order to claim a loss of this type.
