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Internal Revenue Code, § 165. Losses

I.R.C. § 165(a) General Rule
There shall be allowed as a deduction any loss sustained during the taxable year and not compensated for by insurance or otherwise.
I.R.C. § 165(b) Amount Of Deduction
For purposes of subsection (a), the basis for determining the amount of the deduction for any loss shall be the adjusted basis provided in section 1011 for determining the loss from the sale or other disposition of property.
I.R.C. § 165(c) Limitation On Losses Of Individuals
In the case of an individual, the deduction under subsection (a) shall be limited to—
I.R.C. § 165(c)(1)
losses incurred in a trade or business;
I.R.C. § 165(c)(2)
losses incurred in any transaction entered into for profit, though not connected with a trade or business; and
I.R.C. § 165(c)(3)
except as provided in subsection (h), losses of property not connected with a trade or business or a transaction entered into for profit, if such losses arise from fire, storm, shipwreck, or other casualty, or from theft.
I.R.C. § 165(d) Wagering Losses
Losses from wagering transactions shall be allowed only to the extent of the gains from such transactions. For purposes of the preceding sentence, in the case of taxable years beginning after December 31, 2017, and before January 1, 2026, the term ‘losses from wagering transactions’ includes any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction.
I.R.C. § 165(e) Theft Losses
For purposes of subsection (a), any loss arising from theft shall be treated as sustained during the taxable year in which the taxpayer discovers such loss.
I.R.C. § 165(f) Capital Losses
Losses from sales or exchanges of capital assets shall be allowed only to the extent allowed in sections 1211 and 1212.
I.R.C. § 165(g) Worthless Securities
I.R.C. § 165(g)(1) General Rule
If any security which is a capital asset becomes worthless during the taxable year, the loss resulting therefrom shall, for purposes of this subtitle, be treated as a loss from the sale or exchange, on the last day of the taxable year, of a capital asset.
I.R.C. § 165(g)(2) Security Defined
For purposes of this subsection, the term “security" means—
I.R.C. § 165(g)(2)(A)
a share of stock in a corporation;
I.R.C. § 165(g)(2)(B)
a right to subscribe for, or to receive, a share of stock in a corporation; or
I.R.C. § 165(g)(2)(C)
a bond, debenture, note, or certificate, or other evidence of indebtedness, issued by a corporation or by a government or political subdivision thereof, with interest coupons or in registered form.
I.R.C. § 165(g)(3) Securities In Affiliated Corporation
For purposes of paragraph (1), any security in a corporation affiliated with a taxpayer which is a domestic corporation shall not be treated as a capital asset. For purposes of the preceding sentence, a corporation shall be treated as affiliated with the taxpayer only if—
I.R.C. § 165(g)(3)(A)
the taxpayer owns directly stock in such corporation meeting the requirements of section 1504(a)(2), and
I.R.C. § 165(g)(3)(B)
more than 90 percent of the aggregate of its gross receipts for all taxable years has been from sources other than royalties, rents (except rents derived from rental of properties to employees of the corporation in the ordinary course of its operating business), dividends, interest (except interest received on deferred purchase price of operating assets sold), annuities, and gains from sales or exchanges of stocks and securities.
In computing gross receipts for purposes of the preceding sentence, gross receipts from sales or exchanges of stocks and securities shall be taken into account only to the extent of gains therefrom.
I.R.C. § 165(h) Treatment Of Casualty Gains And Losses
I.R.C. § 165(h)(1) Dollar Limitation Per Casualty
Any loss of an individual described in subsection (c)(3) shall be allowed only to the extent that the amount of the loss to such individual arising from each casualty, or from each theft, exceeds $500 ($100 for taxable years beginning after December 31, 2009).
I.R.C. § 165(h)(2) Net Casualty Loss Allowed Only To The Extent It Exceeds 10 Percent Of Adjusted Gross Income
I.R.C. § 165(h)(2)(A) In General
If the personal casualty losses for any taxable year exceed the personal casualty gains for such taxable year, such losses shall be allowed for the taxable year only to the extent of the sum of—
I.R.C. § 165(h)(2)(A)(i)
the amount of the personal casualty gains for the taxable year, plus
I.R.C. § 165(h)(2)(A)(ii)
so much of such excess as exceeds 10 percent of the adjusted gross income of the individual.
I.R.C. § 165(h)(2)(B) Special Rule Where Personal Casualty Gains Exceed Personal Casualty Losses
If the personal casualty gains for any taxable year exceed the personal casualty losses for such taxable year—
I.R.C. § 165(h)(2)(B)(i)
all such gains shall be treated as gains from sales or exchanges of capital assets, and
I.R.C. § 165(h)(2)(B)(ii)
all such losses shall be treated as losses from sales or exchanges of capital assets.
I.R.C. § 165(h)(3) Definitions Of Personal Casualty Gain And Personal Casualty Loss
For purposes of this subsection—
I.R.C. § 165(h)(3)(A) Personal Casualty Gain
The term “personal casualty gain” means the recognized gain from any involuntary conversion of property which is described in subsection (c)(3) arising from fire, storm, shipwreck, or other casualty, or from theft.
I.R.C. § 165(h)(3)(B) Personal Casualty Loss
The term “personal casualty loss” means any loss described in subsection (c)(3). For purposes of paragraph (2), the amount of any personal casualty loss shall be determined after the application of paragraph (1).
I.R.C. § 165(h)(4) Special Rules
I.R.C. § 165(h)(4)(A) Personal Casualty Losses Allowable In Computing Adjusted Gross Income To The Extent Of Personal Casualty Gains
In any case to which paragraph (2)(A) applies, the deduction for personal casualty losses for any taxable year shall be treated as a deduction allowable in computing adjusted gross income to the extent such losses do not exceed the personal casualty gains for the taxable year.
I.R.C. § 165(h)(4)(B) Joint Returns
For purposes of this subsection, a husband and wife making a joint return for the taxable year shall be treated as 1 individual.
I.R.C. § 165(h)(4)(C) Determination Of Adjusted Gross Income In Case Of Estates And Trusts
For purposes of paragraph (2), the adjusted gross income of an estate or trust shall be computed in the same manner as in the case of an individual, except that the deductions for costs paid or incurred in connection with the administration of the estate or trust shall be treated as allowable in arriving at adjusted gross income.
I.R.C. § 165(h)(4)(D) Coordination With Estate Tax
No loss described in subsection (c)(3) shall be allowed if, at the time of filing the return, such loss has been claimed for estate tax purposes in the estate tax return.
I.R.C. § 165(h)(4)(E) Claim Required To Be Filed In Certain Cases
Any loss of an individual described in subsection (c)(3) to the extent covered by insurance shall be taken into account under this section only if the individual files a timely insurance claim with respect to such loss.
I.R.C. § 165(h)(5) Limitation For Taxable Years 2018 Through 2025
I.R.C. § 165(h)(5)(A) In General
In the case of an individual, except as provided in subparagraph (B), any personal casualty loss which (but for this paragraph) would be deductible in a taxable year beginning after December 31, 2017, and before January 1, 2026, shall be allowed as a deduction under subsection (a) only to the extent it is attributable to a Federally declared disaster (as defined in subsection (i)(5)).
I.R.C. § 165(h)(5)(B) Exception Related To Personal Casualty Gains
If a taxpayer has personal casualty gains for any taxable year to which subparagraph (A) applies—
I.R.C. § 165(h)(5)(B)(i)
subparagraph (A) shall not apply to the portion of the personal casualty loss not attributable to a Federally declared disaster (as so defined) to the extent such loss does not exceed such gains, and
I.R.C. § 165(h)(5)(B)(ii)
in applying paragraph (2) for purposes of subparagraph (A) to the portion of personal casualty loss which is so attributable to such a disaster, the amount of personal casualty gains taken into account under paragraph (2)(A) shall be reduced by the portion of such gains taken into account under clause (i).
I.R.C. § 165(i) Disaster Losses
I.R.C. § 165(i)(1) Election To Take Deduction For Preceding Year
Notwithstanding the provisions of subsection (a), any loss occurring in a disaster area and attributable to a federally declared disaster may, at the election of the taxpayer, be taken into account for the taxable year immediately preceding the taxable year in which the disaster occurred.
I.R.C. § 165(i)(2) Year Of Loss
If an election is made under this subsection, the casualty resulting in the loss shall be treated for purposes of this title as having occurred in the taxable year for which the deduction is claimed.
I.R.C. § 165(i)(3) Amount Of Loss
The amount of the loss taken into account in the preceding taxable year by reason of paragraph (1) shall not exceed the uncompensated amount determined on the basis of the facts existing at the date the taxpayer claims the loss.
I.R.C. § 165(i)(4) Use Of Disaster Loan Appraisals To Establish Amount Of Loss
Nothing in this title shall be construed to prohibit the Secretary from prescribing regulations or other guidance under which an appraisal for the purpose of obtaining a loan of Federal funds or a loan guarantee from the Federal Government as a result of a federally declared disaster may be used to establish the amount of any loss described in paragraph (1) or (2).
I.R.C. § 165(i)(5) Federally Declared Disasters
For purposes of this subsection-
I.R.C. § 165(i)(5)(A) In General
The term “Federally1 declared disaster” means any disaster subsequently determined by the President of the United States to warrant assistance by the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.
So in original. Probably should not be capitalized.
I.R.C. § 165(i)(5)(B) Disaster Area
The term “disaster area” means the area so determined to warrant such assistance.
I.R.C. § 165(j) Denial Of Deduction For Losses On Certain Obligations Not In Registered Form
I.R.C. § 165(j)(1) In General
Nothing in subsection (a) or in any other provision of law shall be construed to provide a deduction for any loss sustained on any registration-required obligation unless such obligation is in registered form (or the issuance of such obligation was subject to tax under section 4701).
I.R.C. § 165(j)(2) Definitions
For purposes of this subsection—
I.R.C. § 165(j)(2)(A) Registration-Required Obligation
The term “registration-required obligation” has the meaning given to such term by section 163(f)(2).
I.R.C. § 165(j)(2)(B) Registered Form
The term “registered form” has the same meaning as when used in section 163(f).
I.R.C. § 165(j)(3) Exceptions
The Secretary may, by regulations, provide that this subsection and section 1287 shall not apply with respect to obligations held by any person if—
I.R.C. § 165(j)(3)(A)
such person holds such obligations in connection with a trade or business outside the United States,
I.R.C. § 165(j)(3)(B)
such person holds such obligations as a broker dealer (registered under Federal or State law) for sale to customers in the ordinary course of his trade or business,
I.R.C. § 165(j)(3)(C)
such person complies with reporting requirements with respect to ownership, transfers, and payments as the Secretary may require, or
I.R.C. § 165(j)(3)(D)
such person promptly surrenders the obligation to the issuer for the issuance of a new obligation in registered form, but only if such obligations are held under arrangements provided in regulations or otherwise which are designed to assure that such obligations are not delivered to any United States person other than a person described in subparagraph (A), (B), or (C).
I.R.C. § 165(k) Treatment As Disaster Loss Where Taxpayer Ordered To Demolish Or Relocate Residence In Disaster Area Because Of Disaster
In the case of a taxpayer whose residence is located in an area which has been determined by the President of the United States to warrant assistance by the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, if—
I.R.C. § 165(k)(1)
not later than the 120th day after the date of such determination, the taxpayer is ordered, by the government of the State or any political subdivision thereof in which such residence is located, to demolish or relocate such residence, and
I.R.C. § 165(k)(2)
the residence has been rendered unsafe for use as a residence by reason of the disaster, any loss attributable to such disaster shall be treated as a loss which arises from a casualty and which is described in subsection (i).
I.R.C. § 165(l) Treatment Of Certain Losses In Insolvent Financial Institutions
I.R.C. § 165(l)(1) In General
If—
I.R.C. § 165(l)(1)(A)
as of the close of the taxable year, it can reasonably be estimated that there is a loss on a qualified individual's deposit in a qualified financial institution, and
I.R.C. § 165(l)(1)(B)
such loss is on account of the bankruptcy or insolvency of such institution, then the taxpayer may elect to treat the amount so estimated as a loss described in subsection (c)(3) incurred during the taxable year.
I.R.C. § 165(l)(2) Qualified Individual Defined
For purposes of this subsection, the term “qualified individual” means any individual, except an individual—
I.R.C. § 165(l)(2)(A)
who owns at least 1 percent in value of the outstanding stock of the qualified financial institution,
I.R.C. § 165(l)(2)(B)
who is an officer of the qualified financial institution,
I.R.C. § 165(l)(2)(C)
who is a sibling (whether by the whole or half blood), spouse, aunt, uncle, nephew, niece, ancestor, or lineal descendant of an individual described in subparagraph (A) or (B), or
I.R.C. § 165(l)(2)(D)
who otherwise is a related person (as defined in section 267(b)) with respect to an individual described in subparagraph (A) or (B).
I.R.C. § 165(l)(3) Qualified Financial Institution
For purposes of this subsection, the term “qualified financial institution” means—
I.R.C. § 165(l)(3)(A)
any bank (as defined in section 581),
I.R.C. § 165(l)(3)(B)
any institution described in section 591,
I.R.C. § 165(l)(3)(C)
any credit union the deposits or accounts in which are insured under Federal or State law or are protected or guaranteed under State law, or
I.R.C. § 165(l)(3)(D)
any similar institution chartered and supervised under Federal or State law.
I.R.C. § 165(l)(4) Deposit
For purposes of this subsection, the term “deposit" means any deposit, withdrawable account, or withdrawable or repurchasable share.
I.R.C. § 165(l)(5) Election To Treat As Ordinary Loss
I.R.C. § 165(l)(5)(A) In General
In lieu of any election under paragraph (1), the taxpayer may elect to treat the amount referred to in paragraph (1) for the taxable year as an ordinary loss described in subsection (c)(2) incurred during the taxable year.
I.R.C. § 165(l)(5)(B) Limitations
I.R.C. § 165(l)(5)(B)(i) Deposit May Not Be Federally Insured
No election may be made under subparagraph (A) with respect to any loss on a deposit in a qualified financial institution if part or all of such deposit is insured under Federal law.
I.R.C. § 165(l)(5)(B)(ii) Dollar Limitation
With respect to each financial institution, the aggregate amount of losses attributable to deposits in such financial institution to which an election under subparagraph (A) may be made by the taxpayer for any taxable year shall not exceed $20,000 ($10,000 in the case of a separate return by a married individual). The limitation of the preceding sentence shall be reduced by the amount of any insurance proceeds under any State law which can reasonably be expected to be received with respect to losses on deposits in such institution.
I.R.C. § 165(l)(6) Election
Any election by the taxpayer under this subsection for any taxable year—
I.R.C. § 165(l)(6)(A)
shall apply to all losses for such taxable year of the taxpayer on deposits in the institution with respect to which such election was made, and
I.R.C. § 165(l)(6)(B)
may be revoked only with the consent of the Secretary.
I.R.C. § 165(l)(7) Coordination With Section 166
Section 166 shall not apply to any loss to which an election under this subsection applies.
I.R.C. § 165(m) Cross References
I.R.C. § 165(m)(1)
For special rule for banks with respect to worthless securities, see section 582.
I.R.C. § 165(m)(2)
For disallowance of deduction for worthlessness of securities to which subsection (g)(2)(C) applies, if issued by a political party or similar organization, see section 271.
I.R.C. § 165(m)(3)
For special rule for losses on stock in a small business investment company, see section 1242.
I.R.C. § 165(m)(4)
For special rule for losses of a small business investment company, see section 1243.
I.R.C. § 165(m)(5)
For special rule for losses on small business stock, see section 1244.
(Added Aug. 16, 1954, ch. 736, 68A Stat. 49; Sept. 2, 1958, Pub. L. 85-866, title I, 7, 57(c)(1), title II, 202(a), 72 Stat. 1608, 1646, 1676; Mar. 31, 1962, Pub. L. 87-426, 2(a), 76 Stat. 51; Feb. 26, 1964, Pub. L. 88-272, title II, 208(a), 238, 78 Stat. 43, 128; June 30, 1964, Pub. L. 88-348, 3(a), 78 Stat. 237; Dec. 31, 1970, Pub. L. 91-606, title III, 301(h), 84 Stat. 1759; Jan. 12, 1971, Pub. L. 91-677, 1(a), 84 Stat. 2061; Jan. 12, 1971, Pub. L. 91-687, 1, 84 Stat. 2071; July 1, 1972, Pub. L. 92-336, 2(a), 86 Stat. 406; Aug. 29, 1972, Pub. L. 92-418, 2(a), 86 Stat. 656, 657; May 22, 1974, Pub. L. 93-288, title VI, 602(h), 88 Stat. 164; Oct. 4, 1976, Pub. L. 94-455, title XIX, 1901(a)(26), 90 Stat. 1767; Sept. 3, 1982, Pub. L. 97-248, title II, 203(a), (b), title III, 310(b)(5), 96 Stat. 422, 598; July 18, 1984, Pub. L. 98-369, div. A, title I, 42(a)(4), title VII, 711(c)(1), (2)(A)(i), (ii), title X, 1051(a), 98 Stat. 556, 943, 1044; Oct. 22, 1986, Pub. L. 99-514, title IX, 905(a), title X, 1004(a), 100 Stat. 2385, 2388; Nov. 10, 1988, Pub. L. 100-647, title I, 1009(d)(1), 102 Stat. 3449; Nov. 23, 1988, Pub. L. 100-707, title I, 109(l), 102 Stat. 4709; Pub. L. 105-34, title IX, Sec. 912(a), Aug. 5, 1997, 111 Stat 788; Pub. L. 106-554, Sec. 318, Dec. 21, 2000, 114 Stat. 2763; Pub. L. 108-311, title IV, Sec. 408(a)(7), Oct. 4, 2004, 118 Stat. 1166; Pub. L. 110-343, div. C, title VII, Sec. 706(a), Oct. 3, 2008, 122 Stat. 3765; Pub. L. 111-147, Sec. 502(a)(2)(D), Mar. 18, 2010, 124 Stat. 71; Pub. L. 113-295, Div. A, title II, Sec. 211(c), 221(a)(27), Dec. 19, 2014, 128 Stat. 4010; Pub. L. 115-97, title I, Sec. 11050(a), 11044(a), Dec. 22, 2017, 131 Stat. 2054.)
BACKGROUND NOTES
AMENDMENTS
2017 - Subsec. (d). Pub. L. 115-97, Sec. 11050(a), amended subsec. (d) by adding the sentence at the end.
Subsec. (h). Pub. L. 115-97, Sec. 11044(a), amended subsec. (h) by adding par. (5).
2014 - Subsec. (h)(1). Pub. L 113-295, Div. A, Sec. 211(c)(1)(C), amended the heading of par. (1) by substituting “Dollar” for “$100”.
Subsec. (h)(3)-(5). Pub. L. 113-295, Div. A, Sec. 221(a)(27)(A), amended subsec. (h) by striking par. (3) and by redesignating par. (4)-(5) as par. (3)-(4). Before being struck, it read as follows:
“(3) Special Rule For Losses In Federally Declared Disasters.—
“(A) In General.—If an individual has a net disaster loss for any taxable year, the amount determined under paragraph (2)(A)(ii) shall be the sum of—
“(i) such net disaster loss, and
“(ii) so much of the excess referred to in the matter preceding clause (i) of paragraph (2)(A) (reduced by the amount in clause (i) of this subparagraph) as exceeds 10 percent of the adjusted gross income of the individual.
“(B) Net Disaster Loss.—For purposes of subparagraph (A), the term “net disaster loss” means the excess of—
“(i) the personal casualty losses—
“(I) attributable to a federally declared disaster occurring before January 1, 2010, and
“(II) occurring in a disaster area, over
“(ii) personal casualty gains.
“(C) Federally Declared Disaster.—For purposes of this paragraph—
“(i) Federally Declared Disaster.—The term “federally declared disaster” means any disaster subsequently determined by the President of the United States to warrant assistance by the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.
“(ii) Disaster Area.—The term “disaster area” means the area so determined to warrant such assistance.”
Subsec. (h)(3). Pub. L. 113-295, Div. A, Sec. 221(a)(27)(B), amended par. (3), as redesignated, by substituting “paragraph (2)” for “paragraphs (2) and (3)”.
Subsec. (i)(1). Pub. L. 113-295, Div. A, Sec. 221(a)(27)(C)(i), amended par. (1) by striking “(as defined by clause (ii) of subsection(h)(3)(C))” and “(as defined by clause (i) of such subsection)”.
Subsec. (i)(4). Pub. L. 113-295, Div. A, Sec. 221(a)(27)(C)(ii), amended par. (4) by striking “(as defined by subsection (h)(3)(C)(i)”.
Subsec. (i)(5). Pub. L. 113-295, Div. A, Sec. 221(a)(27)(C)(iii), added par. (5).
2010 - Subsec. (j)(2)(A), Pub. L. 111-147, Sec. 502(a)(2)(D), amended subpar. (A) by striking “ except that clause (iv) of subparagraph (A), and subparagraph (B), of such section shall not apply” at the end of the sentence.
2008 - Subsec. (h)(1). Pub. L. 110-343, Div. C, Sec. 706(c), amended par. (1) by substituting “$500 ($100 for taxable years beginning after December 31, 2009)” for “$100”.
Subsec. (h)(3)-(5). Pub. L. 110-343, Div. C, Sec. 706(a)(1), amended subsec. (h) by redesignating par. (3) and (4) as par. (4) and (5), respectively and by adding par. (3).
Subsec. (h)(4)(B). Pub. L. 110-343, Div. C, Sec. 706(a)(2)(A), amended subpar. (B) by substituting “paragraphs (2) and (3)” for “paragraph (2)”.
Subsec. (i)(1). Pub. L. 10-343, Div. C, Sec. 706(a)(2)(B), amended par. (1) by substituting “loss occurring in a disaster area (as defined by clause (ii) of subsection (h)(3)(C)) and attributable to a federally declared disaster (as defined by clause (i) of such subsection)” for “loss attributable to a disaster occurring in an area subsequently determined by the President of the United States to warrant assistance by the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act”.
Subsec. (i)(4). Pub. L. 110-343, Div. C, Sec. 706(a)(2)(C), amended par. (4) by substituting “federally declared disaster (as defined by subsection (h)(3)(C)(i)” for “Presidentially declared disaster (as defined by section 1033(h)(3))”. Note that it appears a close parenthesis was inadvertently omitted from the substituted language.
2004-Subsec. (i)(1). Pub. L. 108-311, Sec. 408(a)(7)(A), amended par. (1) by inserting “Robert T. Stafford” before “Disaster Relief and Emergency Assistance Act”.
Subsec. (k). Pub. L. 108-311, Sec. 408(a)(7)(B), amended subsec. (k) by inserting “Robert T. Stafford” before “Disaster Relief and Emergency Assistance Act”.
2000-Subsec. (g)(3). Pub. L. 106-554, Sec. 318(b)(2), struck the last sentence of par. (3) which read as follows: “As used in subparagraph (A), the term “stock” does not include nonvoting stock which is limited and preferred as to dividends.”
Subsec. (g)(3)(A). Pub. L. 106-554, Sec. 318(b)(1), amended subpar. (A). Before amendment, it read as follows:
“(A) stock possessing at least 80 percent of the voting power of all classes of its stock and at least 80 percent of each class of its nonvoting stock is owned directly by the taxpayer, and”.
1997--Subsec. (i)(4). Pub. L. 105-34, Sec. 912(a), added par. (4).
1988--Subsecs. (i)(1), (k). Pub. L. 100-707 substituted “and Emergency Assistance Act” for “Act of 1974”.
Subsec. (l)(5) to (7). Pub. L. 100-647 added pars. (5) and (6), redesignated former par. (6) as (7), and struck out former par. (5) which read as follows: “Election.--Any election by the taxpayer under this subsection may be revoked only with the consent of the Secretary and shall apply to all losses of the taxpayer on deposits in the institution with respect to which such election was made.”
1986--Subsec. (h)(4)(E). Pub. L. 99-514, 1004(a), added subpar. (E).
Subsecs. (l), (m). Pub. L. 99-514, 905(a), added subsec. (l) and redesignated former subsec. (l) as (m).
1984--Subsec. (c)(3). Pub. L. 98-369, 711(c)(2)(A)(i), extended limitation to losses of property not connected with a transaction entered into for profit.
Subsec. (h). Pub. L. 98-369, 711(c)(2)(A)(ii), substituted heading “Treatment of casualty gains and losses” for “Casualty and theft losses”; substituted par. (1) “$100 limitation per casualty” provision for former par. (1) “General rule” provision stating that: “Any loss of an individual described in subsection (c)(3) shall be allowed for any taxable year only to the extent that--
“(A) the amount of loss to such individual arising from each casualty, or from each theft, exceeds $100, and
“(B) the aggregate amount of all such losses sustained by such individual during the taxable year (determined after application of subparagraph (A) exceeds 10 percent of the adjusted gross income of the individual.”; added par. (2) “Net casualty loss allowed only to the extent it exceeds 10 percent of adjusted gross income” provision and par. (3) “Definitions of personal casualty gain and personal casualty loss” provisions; redesignated as par. (4) former par. (2) catchline; added par. (4)(A) “Personal casualty losses allowable in computing adjusted gross income to the extent of personal casualty gains” provision; redesignated as par. (4)(B) former par. (2)(A) joint returns provision, substituting “For purposes of this section” for “For purposes of the $100 and 10 percent limitations described in paragraph (1)” and “individual” for “one individual”; redesignated as par. (4)(C) former par. (2)(B), substituting therein paragraph “(2)” for “(1)”; and redesignated as par. (4)(D) former par. (2)(C).
Pub. L. 98-369, 711(c)(1), amended par. (2) by redesignating subpar. (B) as (C) and by adding a new subpar. (B) relating to the determination of adjusted gross income in case of estates and trusts.
Subsec. (j)(3). Pub. L. 98-369, 42(a)(4), substituted “section 1287” for “subsection (d) of section 1232”.
Subsecs. (k), (l). Pub. L. 98-369, 1051(a), added subsec. (k) and redesignated former subsec. (k) as (l).
1982--Subsec. (c)(3). Pub. L. 97-248, 203(b), inserted “except as provided in subsection (h),” before “losses of property" and struck out provisions that a loss described in this paragraph would be allowed only to the extent that the amount of loss to such individual arising from each casualty, or from each theft, exceeded $100, that, for purposes of the $100 limitation, a husband and wife making a joint return under section 6013 for the taxable year in which the loss was allowed as a deduction would be treated as one individual, and that no loss described in this paragraph would be allowed if, at the time of filing the return, such loss had been claimed for estate tax purposes in the estate tax return.
Subsec. (h). Pub. L. 97-248, 203(a), added subsec. (h) relating to casualty and theft losses. Former subsec. (h), relating to disaster losses, redesignated (i).
Subsec. (i). Pub. L. 97-248, 203(a), redesignated former subsec. (h), relating to disaster losses, as (i), in subsec. (i), as so redesignated, further redesignated existing unnumbered provisions as pars. (1) and (2), in par. (1), as so redesignated, substituted “be taken into account for the taxable year” for “be deducted for the taxable year”, in par. (2), as so redesignated, substituted “shall be treated for purposes of this title as having occurred” for “will be deemed to have occurred”, added par. (3), and struck out provision that a deduction under this subsection could not be in excess of so much of the loss as would have been deductible in the taxable year in which the casualty occurred, based on facts existing at the date the taxpayer claimed the loss. Former subsec. (i), setting forth cross references, redesignated (j).
Subsec. (j). Pub. L. 97-248, 310(b)(5), added subsec. (j) relating to denial of deduction for losses on certain obligations not in registered form. Former subsec. (j), setting forth cross references, redesignated (k).
Pub. L. 97-248, 203(a), redesignated former subsec. (i), setting forth cross references, as (j).
Subsec. (k). Pub. L. 97-248, 310(b)(5), redesignated former subsec. (j), setting forth cross references, as (k).
1976--Subsecs. (i), (j). Pub. L. 94-455 redesignated subsec. (j) as subsec. (i). Former subsec. (i), which related to property confiscated by Cuba, was struck out.
1974--Subsec. (h). Pub. L. 93-288 substituted “Disaster Relief Act of 1974” for “Disaster Relief Act of 1970”.
1972--Subsec. (h). Pub. L. 92-418 struck out par. (1) provisions relating to losses attributable to a disaster occurring during period following close of taxable year and on or before time prescribed by law for filing the income tax return for the taxable year without regard to any extension of time, struck out par. (2) designation, and inserted “attributable to a disaster” before “occurring in an area”, and at end of second sentence, inserted “based on facts existing at the date the taxpayer claims the loss”.
Subsec. (h)(1). Pub. L. 92-336 substituted provisions relating to losses attributable to a disaster which occurs during the period after the close of the taxable year and on or before the last day of the 6th calendar month beginning after the close of the taxable year, for provisions relating to losses attributable to a disaster which occurs during the period following the close of the taxable year and on or before the time prescribed by law for filing the income tax return for the taxable year, determined without regard to any extension of time.
1971--Subsec. (g)(3). Pub. L. 91-687 substituted “stock possessing at least 80 percent of the voting power of all classes of its stock and at least 80 percent of each class of its nonvoting stock” for “at least 95 percent of each class of its stock” in subpar. (A), and inserted at the end of the subsection the sentence providing that the term “stock”, as used in subpar. (A), does not include nonvoting stock which is limited and preferred as to dividends.
Subsec. (i)(1). Pub. L. 91-677, 1(a)(1), (2), struck out “or (2)” after “paragraph (1)” in cl. (B), and substituted “one or more days in the period beginning on December 31, 1958, and ending on May 16, 1959" for “December 31, 1958”.
Subsec. (i)(2)(B). Pub. L. 91-677, 1(a)(3), substituted “one or more days during the period beginning on December 31, 1958, and ending on May 16, 1959” for “December 31, 1958” and “the first day in such period on which the property was held by the taxpayer” for “December 31, 1958”.
Subsec. (i)(3). Pub. L. 91-677, 1(a)(4), struck out subsec. (i)(3) which authorized a refund or credit to be given for any overpayment attributable to the application of par. (1), provided that a claim was filed for such refund or credit before Jan. 1, 1965.
1970--Subsec. (h)(2). Pub. L. 91-606 substituted “the Disaster Relief Act of 1970” for “sections 1855-1855g of title 42”.
1964--Subsec. (c)(3). Pub. L. 88-272, 208(a), inserted requirement that losses must exceed $100 to be deductible.
Subsec. (i). Pub. L. 88-348 designated existing provisions as par. (1), substituted provisions permitting individuals who were citizens of the United States or resident aliens on Dec. 31, 1958, who sustained any loss of property prior to Jan. 1, 1964, and which was not a loss described in par. (1) or (2) of subsec. (c), to treat such loss as a loss under subsec. (c)(3), except that in cases of tangible property, the property had to be held by the taxpayer, and located in Cuba, on Dec. 31, 1958, for provisions which permitted any loss of tangible property to be treated as a loss from a casualty within subsec. (c)(3), therein, and added pars. (2) and (3).
Pub. L. 88-272, 238, added subsec. (i). Former subsec. (i) redesignated (j).
Subsec. (j). Pub. L. 88-272, 238, redesignated former subsec. (i) as (j).
1962--Subsecs. (h), (i). Pub. L. 87-426 added subsec. (h) and redesignated former subsec. (h) as (i).
1958--Subsec. (g)(3)(B). Pub. L. 85-866, 7, substituted “rental of” for “rental from”.
Subsec. (h)(3), (4). Pub. L. 85-866, 57(c)(1), added pars. (3) and (4).
Subsec. (h)(5). Pub. L. 85-866, 202(a), added par. (5).
EFFECTIVE DATE OF 2017 AMENDMENTS
Amendment by Pub. L. 115-97, Sec. 11044(a), effective for losses incurred in taxable years beginning after December 31, 2017.
Amendments by Pub. L. 115-97, Sec. 11050(a), effective for taxable years beginning after December 31, 2017.
EFFECTIVE DATE OF 2014 AMENDMENTS
Amendment by Pub. L. 113-295, Div. A, Sec. 211(c)(1)(C), effective as if included in the provision of the 2008 Tax Extenders and Alternative Minimum Tax Relief Act of 2008 [Pub. L. 110-343, Sec. 706] to which it relates.
Amendments by Pub. L. 113-295, Div. A, Sec. 221(a)(27), effective on the date of the enactment of this Act [Enacted: Dec. 19, 2014].
Section 221(b)(2) of Pub. L. 113-295, Div. A, provided the following Savings Provision:
“(2) SAVINGS PROVISION.—If—
“(A) any provision amended or repealed by the amendments made by this section applied to—
“(i) any transaction occurring before the date of the enactment of this Act [Enacted: Dec. 19, 2014],
“(ii) any property acquired before such date of enactment, or
“(iii) any item of income, loss, deduction, or credit taken into account before such date of enactment, and
“(B) the treatment of such transaction, property, or item under such provision would (without regard to the amendments or repeals made by this section) affect the liability for tax for periods ending after date of enactment, nothing in the amendments or repeals made by this section shall be construed to affect the treatment of such transaction, property, or item for purposes of determining liability for tax for periods ending after such date of enactment.”
EFFECTIVE DATE OF 2010 AMENDMENT
Amendment by Sec. 502(a) of Pub. L. 111-147 effective for obligations issued after the date which is 2 years after the date of the enactment of this Act [Enacted: Mar. 18, 2010].
EFFECTIVE DATE OF 2008 AMENDMENTS
Amendments by Div. C, Sec. 706(a) of Pub. L. 110-343 effective for disasters declared in taxable years beginning after December 31, 2007. Pub. L. 110-343, Div. C, Sec. 712, as amended by Pub. L. 113-295, Div. A, Sec. 211(c)(3), provided that:
“The amendments made by this subtitle, other than the amendments made by sections 706(a)(2), 710, and 711, shall not apply to any disaster described in section 702(b)(1)(A), or to any expenditure or loss resulting from such disaster.”
EFFECTIVE DATE OF 2004 AMENDMENTS
Amendments by Sec. 408(a)(7) of Pub. L. 108-311 effective on the date of the enactment of this Act [Enacted: Oct. 4, 2004].
EFFECTIVE DATE OF 2000 AMENDMENTS
Amendments by Sec. 318(b) of Pub. L. 106-554 effective for taxable years beginning after December 31, 1984.
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendment by Sec. 912(a) of Pub. L. 105-34 effective on the date of the enactment of this Act [Aug. 5, 1997].
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 905(a) of Pub. L. 99-514 applicable to taxable years beginning after Dec. 31, 1981, see section 905(c)(1) of Pub. L. 99-514, as amended, set out as a note under section 451 of this title.
Section 1004(b) of Pub. L. 99-514 provided that: “The amendment made by this section [amending this section] shall apply to losses sustained in taxable years beginning after December 31, 1986.”
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 42(a)(4) of Pub. L. 98-369 applicable to taxable years ending after July 18, 1984, see section 44 of Pub. L. 98-369, set out as an Effective Date note under section 1271 of this title.
Amendment by section 711(c)(1) of Pub. L. 98-369 effective as if included in the provision of the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-248, to which such amendment relates, see section 715 of Pub. L. 98-369, set out as a note under section 31 of this title.
Section 711(c)(2)(A)(v) of Pub. L. 98-369 provided that: “The amendments made by this subparagraph [amending sections 165, 873, 931, and 1231 of this title] shall apply to taxable years beginning after December 31, 1983.”
Section 1051(b) of Pub. L. 98-369 provided that: “The amendment made by subsection (a) [amending this section] shall apply to taxable years ending after December 31, 1981, with respect to residences in areas determined by the President of the United States, after such date, to warrant assistance by the Federal Government under the Disaster Relief Act of 1974 [42 U.S.C. 5121 et seq.].”
EFFECTIVE DATE OF 1982 AMENDMENT
Section 203(c) of Pub. L. 97-248, as amended by Pub. L. 99-514, 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 1982. Such amendments shall also apply to the taxpayer's last taxable year beginning before January 1, 1983, solely for purposes of determining the amount allowable as a deduction with respect to any loss taken into account for such year by reason of an election under section 165(i) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as amended by this section).”
Amendment by section 310(b)(5) of Pub. L. 97-248 applicable to obligations issued after Dec. 31, 1982, with exceptions for certain warrants, see section 310(d) of Pub. L. 97-248, set out as a note under section 103 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by Pub. L. 94-455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out as a note under section 2 of this title.
EFFECTIVE DATE OF 1974 AMENDMENT
Amendment by Pub. L. 93-288 effective Apr. 1, 1974, see section 605 of Pub. L. 93-288, set out as an Effective Date note under section 5121 of Title 42, The Public Health and Welfare.
EFFECTIVE DATE OF 1972 AMENDMENTS
Section 2(c) of Pub. L. 92-418 provided in part that: “The amendment made by subsection (a) [amending this section] shall apply to disasters occurring after December 31, 1971, in taxable years ending after such date.”
Section 2(b) of Pub. L. 92-336 provided that: “The amendment made by subsection (a) [amending this section] shall apply to disasters occurring after December 31, 1971, in taxable years ending after such date.”
EFFECTIVE DATE OF 1971 AMENDMENTS
Section 2 of Pub. L. 91-687 provided that: “The amendments made by this Act [amending this section] shall apply with respect to taxable years beginning on or after January 1, 1970.”
Section 1(b)(1) of Pub. L. 91-677 provided that: “The amendments made by subsection (a) [amending this section] shall apply in respect of losses sustained in taxable years ending after December 31, 1958.”
EFFECTIVE DATE OF 1970 AMENDMENT
Section 304 of Pub. L. 91-606 provided that: “This Act [enacting sections 4401 to 4485 of Title 42, The Public Health and Welfare, amending sections 165, 5064, and 5708 of this title, sections 1706e, 1709, 1715l of Title 12, Banks and Banking, sections 241-1, 646 and 758 of Title 20, Education, section 1820 of Title 38, Veterans' Benefits, section 461 of Title 40, Public Buildings, Property, and Works, section 1681 note of Title 42, repealing sections 1855 to 1855g, 1855aa, 1855aa note, 1855bb to 1855ii, 1855aaa, 1855aaa note, 1855bbb to 1855nnn of Title 42, and section 1926 of Title 7, Agriculture, and enacting provisions set out as notes under section 4401 and section 4434 of Title 42] shall take effect immediately upon its enactment [Dec. 31, 1970], except that sections 226(b), 237, 241, 252(a), and 254 [sections 4436(b), 4456, 4460, 4482(a), and 4484 of Title 42, respectively] shall take effect as of August 1, 1969, and sections 231, 232, and 233 [sections 4451, 4452 of Title 42 and amendments to section 1820 of Title 38, respectively] shall take effect as of April 1, 1970.”
EFFECTIVE DATE OF 1964 AMENDMENTS
Section 208(b) of Pub. L. 88-272 provided that: “The amendment made by subsection (a) [amending this section] shall apply to losses sustained after December 31, 1963, in taxable years ending after such date.”
Section 3(b) of Pub. L. 88-348 provided that: “The amendment made by subsection (a) [amending this section] shall apply in respect of losses sustained in taxable years ending after December 31, 1958.”
EFFECTIVE DATE OF 1962 AMENDMENT
Section 2(b) of Pub. L. 87-426 provided that: “The amendments made by this section [amending this section] shall be effective with respect to any disaster occurring after December 31, 1961.”
EFFECTIVE DATE OF 1958 AMENDMENT
Section 1(c) of title I of Pub. L. 85-866, as amended by Pub. L. 99-514, 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “Except as otherwise expressly provided--
“(1) amendments made by this title to subtitle A of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (relating to income taxes) [enacting section 558 of this title and amending sections 152, 165, 166, 168, 170, 172, 213, 337, 404, 421, 535, 545, 556, 582, 611, 613, 851, 1015, 1031, 1033, 1034, 1053, 1232, 1233, 1234, 1237, 1341, and 1347 of this title] shall apply to taxable years beginning after December 31, 1953, and ending after August 16, 1954; and
“(2) amendments made by this title to subtitle F of such Code (relating to procedure and administration) [enacting sections 7513 and 7514 of this title and amending sections 6013, 6015, 6212, 6325, 6338, 6339, 6501, 6504, 6511, 6601, 6652, 6653, 6851, 6871, 7213, 7324, 7325, and 7422 of this title] shall take effect as of August 17, 1954, and such subtitle, as so amended, shall apply as provided in section 7851 of the Internal Revenue Codeof 1986”.
Amendment by section 57(c)(1) of Pub. L. 85-866 applicable with respect to taxable years beginning after Sept. 2, 1958, see section 57(d) of Pub. L. 85-866, set out as a note under section 243 of this title.
RELIEF FOR 2016 DISASTER AREAS
Section 11028 of Pub. L. 115-97 provided that:
“(a) IN GENERAL.—For purposes of this section, the term ‘‘2016 disaster area’’ means any area with respect to which a major disaster has been declared by the President under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act during calendar year 2016.
“(b) SPECIAL RULES FOR USE OF RETIREMENT FUNDS WITH RESPECT TO AREAS DAMAGED BY 2016 DISASTERS.—
“(1) TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS.—
“(A) IN GENERAL.—Section 72(t) of the Internal Revenue Code of 1986 shall not apply to any qualified 2016 disaster distribution.
“(B) AGGREGATE DOLLAR LIMITATION.—
“(i) IN GENERAL.—For purposes of this subsection, the aggregate amount of distributions received by an individual which may be treated as qualified 2016 disaster distributions for any taxable year shall not exceed the excess (if any) of—
“(I) $100,000, over (II) the aggregate amounts treated as qualified 2016 disaster distributions received by such individual for all prior taxable years.
“(ii) TREATMENT OF PLAN DISTRIBUTIONS.—If a distribution to an individual would (without regard to clause (i)) be a qualified 2016 disaster distribution, a plan shall not be treated as violating any requirement of this title merely because the plan treats such dis- tribution as a qualified 2016 disaster distribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $100,000.
“(iii) CONTROLLED GROUP.—For purposes of clause (ii), the term ‘‘controlled group’’ means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986.
“(C) AMOUNT DISTRIBUTED MAY BE REPAID.—
“(i) IN GENERAL.—Any individual who receives a qualified 2016 disaster distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received, make one or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16) of the Internal Revenue Code of 1986, as the case may be.
“(ii) TREATMENT OF REPAYMENTS OF DISTRIBUTIONS FROM ELIGIBLE RETIREMENT PLANS OTHER THAN IRAS.— For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to clause (i) with respect to a qualified 2016 disaster distribution from an eligible retirement plan other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received the qualified 2016 disaster distribution in an eligible rollover distribution (as defined in section 402(c)(4) of the Internal Revenue Code of 1986) and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.
“(iii) TREATMENT OF REPAYMENTS FOR DISTRIBUTIONS FROM IRAS.—For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to clause (i) with respect to a qualified 2016 disaster distribution from an individual retirement plan (as defined by section 7701(a)(37) of the Internal Revenue Code of 1986), then, to the extent of the amount of the contribution, the qualified 2016 disaster distribution shall be treated as a distribution described in section 408(d)(3) of such Code and as having been transferred to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.
“(D) DEFINITIONS.—For purposes of this paragraph—
“(i) QUALIFIED 2016 DISASTER DISTRIBUTION.—Except as provided in subparagraph (B), the term ‘‘qualified 2016 disaster distribution’’ means any distribution from an eligible retirement plan made on or after January 1, 2016, and before January 1, 2018, to an individual whose principal place of abode at any time during calendar year 2016 was located in a disaster area described in subsection (a) and who has sustained an economic loss by reason of the events giving rise to the Presidential declaration described in subsection (a) which was applicable to such area.
“(ii) ELIGIBLE RETIREMENT PLAN.—The term ‘‘eligible retirement plan’’ shall have the meaning given such term by section 402(c)(8)(B) of the Internal Revenue Code of 1986.
“(E) INCOME INCLUSION SPREAD OVER 3-YEAR PERIOD.—
“(i) IN GENERAL.—In the case of any qualified 2016 disaster distribution, unless the taxpayer elects not to have this subparagraph apply for any taxable year, any amount required to be included in gross income for such taxable year shall be so included ratably over the 3-taxable-year period beginning with such taxable year.
“(ii) SPECIAL RULE.—For purposes of clause (i), rules similar to the rules of subparagraph (E) of section 408A(d)(3) of the Internal Revenue Code of 1986 shall apply.
“(F) SPECIAL RULES.—
“(i) EXEMPTION OF DISTRIBUTIONS FROM TRUSTEE TO TRUSTEE TRANSFER AND WITHHOLDING RULES.—For purposes of sections 401(a)(31), 402(f), and 3405 of the Internal Revenue Code of 1986, qualified 2016 disaster distribution shall not be treated as eligible rollover distributions.
“(ii) QUALIFIED 2016 DISASTER DISTRIBUTIONS TREATED AS MEETING PLAN DISTRIBUTION REQUIREMENTS.—For purposes of the Internal Revenue Code of 1986, a qualified 2016 disaster distribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) of the Internal Revenue Code of 1986.
“(2) PROVISIONS RELATING TO PLAN AMENDMENTS.—
“(A) IN GENERAL.—If this paragraph applies to any amendment to any plan or annuity contract, such plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in subparagraph (B)(ii)(I).
“(B) AMENDMENTS TO WHICH SUBSECTION APPLIES.—
“(i) IN GENERAL.—This paragraph shall apply to any amendment to any plan or annuity contract which is made—
“(I) pursuant to any provision of this section, or pursuant to any regulation under any provision of this section, and
“(II) on or before the last day of the first plan year beginning on or after January 1, 2018, or such later date as the Secretary prescribes. In the case of a governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986), subclause (II) shall be applied by substituting the date which is 2 years after the date otherwise applied under subclause (II).
“(ii) CONDITIONS.—This paragraph shall not apply to any amendment to a plan or contract unless such amendment applies retroactively for such period, and shall not apply to any such amendment unless the plan or contract is operated as if such amendment were in effect during the period—
“(I) beginning on the date that this section or the regulation described in clause (i)(I) takes effect (or in the case of a plan or contract amendment not required by this section or such regulation, the effective date specified by the plan), and
“(II) ending on the date described in clause (i)(II) (or, if earlier, the date the plan or contract amendment is adopted).
“(c) SPECIAL RULES FOR PERSONAL CASUALTY LOSSES RELATED TO 2016 MAJOR DISASTER.—
“(1) IN GENERAL.—If an individual has a net disaster loss for any taxable year beginning after December 31, 2015, and before January 1, 2018—
“(A) the amount determined under section 165(h)(2)(A)(ii) of the Internal Revenue Code of 1986 shall be equal to the sum of—
“(i) such net disaster loss, and
“(ii) so much of the excess referred to in the matter preceding clause (i) of section 165(h)(2)(A) of such Code (reduced by the amount in clause (i) of this subparagraph) as exceeds 10 percent of the adjusted gross income of the individual,
“(B) section 165(h)(1) of such Code shall be applied by substituting ‘‘$500’’ for ‘‘$500 ($100 for taxable years beginning after December 31, 2009)’’,
“(C) the standard deduction determined under section 63(c) of such Code shall be increased by the net disaster loss,”
“(D) section 56(b)(1)(E) of such Code shall not apply to so much of the standard deduction as is attributable to the increase under subparagraph (C) of this paragraph.
“(2) NET DISASTER LOSS.—For purposes of this subsection, the term ‘‘net disaster loss’’ means the excess of qualified disaster-related personal casualty losses over personal casualty gains (as defined in section 165(h)(3)(A) of the Internal Revenue Code of 1986).
“(3) QUALIFIED DISASTER-RELATED PERSONAL CASUALTY LOSSES.—For purposes of this paragraph, the term ‘‘qualified disaster-related personal casualty losses’’ means losses described in section 165(c)(3) of the Internal Revenue Code of 1986 which arise in a disaster area described in subsection (a) on or after January 1, 2016, and which are attributable to the events giving rise to the Presidential declaration described in subsection (a) which was applicable to such area.”
SPECIAL RULES FOR QUALIFIED DISASTER-RELATED PERSONAL CASUALTY LOSSES
Section 504(b)(1) of Pub. L. 115-63 provided:
“(1) IN GENERAL.—If an individual has a net disaster loss for any taxable year—
“(A) the amount determined under section 165(h)(2)(A)(ii) of the Internal Revenue Code of 1986 shall be equal to the sum of—
“(i) such net disaster loss, and
“(ii) so much of the excess referred to in the matter preceding clause (i) of section 165(h)(2)(A) of such Code (reduced by the amount in clause (i) of this subparagraph) as exceeds 10 percent of the adjusted gross income of the individual,
“(B) section 165(h)(1) of such Code shall be applied by substituting “$500” for “$500 ($100 for taxable years beginning after December 31, 2009)”,
“(C) the standard deduction determined under section 63(c) of such Code shall be increased by the net disaster loss, and
“(D) section 56(b)(1)(E) of such Code shall not apply to so much of the standard deduction as is attributable to the increase under subparagraph (C) of this paragraph.”
TRANSITIONAL RULE FOR 1984 AMENDMENT
Section 711(c)(2)(B) of Pub. L. 98-369, as amended by Pub. L. 99-514, 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “In the case of taxable years beginning before January 1, 1984--
“(i) For purposes of paragraph (1)(B) of section 165(h) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], adjusted gross income shall be determined without regard to the application of section 1231 of such Code to any gain or loss from an involuntary conversion of property described in subsection (c)(3) of section 165 of such Code arising from fire, storm, shipwreck, or other casualty or from theft.
“(ii) Section 1231 of such Code shall be applied after the application of paragraph (1) of section 165(h) of such Code.”
USE OF AMENDED INCOME TAX RETURNS TO TAKE INTO ACCOUNT RECEIPT OF CERTAIN HURRICANE-RELATED CASUALTY LOSS GRANTS BY DISALLOWING PREVIOUSLY TAKEN CASUALTY LOSS DEDUCTIONS
Section 3082 of Pub. L. 110-289 provided that:
“(1) IN GENERAL.—Notwithstanding any other provision of the Internal Revenue Code of 1986, if a taxpayer claims a deduction for any taxable year with respect to a casualty loss to a principal residence (within the meaning of section 121 of such Code) resulting from Hurricane Katrina, Hurricane Rita, or Hurricane Wilma and in a subsequent taxable year receives a grant under Public Law 109? 148, 109?234, or 110?116 as reimbursement for such loss, such taxpayer may elect to file an amended income tax return for the taxable year in which such deduction was allowed (and for any taxable year to which such deduction is carried) and reduce (but not below zero) the amount of such deduction by the amount of such reimbursement.
“(2) TIME OF FILING AMENDED RETURN.—Paragraph (1) shall apply with respect to any grant only if any amended income tax returns with respect to such grant are filed not later than the later of—
“ (A) the due date for filing the tax return for the taxable year in which the taxpayer receives such grant, or
“(B) the date which is 1 year after the date of the enactment of this Act.
“(3) WAIVER OF PENALTIES AND INTEREST.—Any underpayment of tax resulting from the reduction under paragraph (1) of the amount otherwise allowable as a deduction shall not be subject to any penalty or interest under such Code if such tax is paid not later than 1 year after the filing of the amended return to which such reduction relates.”
SUSPENSION OF CERTAIN LIMITATIONS ON PERSONAL CASUALTY LOSSES
Section 402 of Pub. L. 109-73, before repeal by Pub. L. 109-135, Sec. 201(b)(4) (effective Dec. 21, 2005), provided that:
“Paragraphs (1) and (2)(A) of section 165(h) of the Internal Revenue Code of 1986 shall not apply to losses described in section 165(c)(3) of such Code which arise in the Hurricane Katrina disaster area on or after August 25, 2005, and which are attributable to Hurricane Katrina. In the case of any other losses, section 165(h)(2)(A) of such Code shall be applied without regard to the losses referred to in the preceding sentence.”
OVERPAYMENTS OR UNDERPAYMENTS OF TAX ATTRIBUTABLE TO CERTAIN AMENDMENTS BY PUB. L. 99-514 OR PUB. L. 100-647
Section 1009(d)(4) of Pub. L. 100-647 provided that: “If on the date of the enactment of this Act [Nov. 10, 1988] (or at any time before the date 1 year after such date of enactment) credit or refund of any overpayment of tax attributable to amendments made by section 905 of the Reform Act [section 905 of Pub. L. 99-514, amending sections 165 and 451 of this title] or by this subsection [amending sections 165 and 451 of this title and provisions set out as a note under section 451 of this title] (or the assessment of any underpayment of tax so attributable) is barred by any law or rule of law--
“(A) credit or refund of any such overpayment may nevertheless be made if claim therefore [sic] is filed before the date 1 year after such date of enactment, and
“(B) assessment of any such underpayment may nevertheless be made if made before the date 1 year after such date of enactment.”
DEDUCTION FOR BUS AND FREIGHT FORWARDER OPERATING AUTHORITY
Section 243 of Pub. L. 99-514, as amended by Pub. L. 100-647, title I, 1002(j), Nov. 10, 1988, 102 Stat. 3371, provided that:
“(a) Bus Operating Authority.--
“(1) In general.--Subject to the modifications contained in paragraph (2), section 266 of the Economic Recovery Tax Act of 1981 [section 266 of Pub. L. 97-34, set out as a note below] shall be applied as if the term ‘motor carrier operating authority’ included a bus operating authority.
“(2) Modifications.--For purposes of paragraph (1), section 266 of such Act shall be applied--
“(A) by substituting ‘November 19, 1982’ for ‘July 1, 1980’ each place it appears, and
“(B) by substituting ‘November 1982’ for ‘July 1980’ in subsection (a) thereof.
“(3) Bus operating authority defined.--For purposes of this subsection and section 266 of such Act, the term ‘bus operating authority’ means--
“(A) a certificate or permit held by a motor common or contract carrier of passengers which was issued pursuant to subchapter II of chapter 109 of title 49, United States Code, and
“(B) a certificate or permit held by a motor carrier authorizing the transportation of passengers, as a common carrier, over regular routes in intrastate commerce which was issued by the appropriate State agency.
“(b) Freight Forwarder Operating Authority.--
“(1) In general.--Subject to the modifications contained in paragraph (2), section 266 of the Economic Recovery Tax Act of 1981 [section 266 of Pub. L. 97-34, set out as a note below] shall be applied as if subsection (b) thereof contained ‘or a freight forwarder’ after ‘contract carrier of property’.
“(2) Modifications.--The modifications referred to in this paragraph are:
“(A) 60-month period.--The 60-month period referred to in section 266(a) of such Act shall begin with the later of--
“(i) the deregulation month, or
“(ii) at the election of the taxpayer, the 1st month of the taxpayer's 1st taxable year beginning after the deregulation month.
“(B) Authority must be held as of beginning of 60-month period.--A motor carrier operating authority shall not be taken into account unless such authority is held by the taxpayer at the beginning of the 60-month period applicable to the taxpayer under subparagraph (A).
“(C) Adjusted basis not to exceed adjusted basis at beginning of 60-month period.--The adjusted basis taken into account with respect to any motor carrier operating authority shall not exceed the adjusted basis of such authority as of the beginning of the 60-month period applicable to the taxpayer under subparagraph (A).
“(3) Deregulation month.--For purposes of this section, the term ‘deregulation month’ means the month in which the Secretary of the Treasury or his delegate determines that a Federal law has been enacted which deregulates the freight forwarding industry.
“(c) Special Rule for Motor Carrier Operating Authority.--In the case of a corporation which was incorporated on December 29, 1969, in the State of Delaware, notwithstanding any other provision of law, there shall be allowed as a deduction for the taxable year of the taxpayer beginning in 1980 an amount equal to $2,705,188 for its entire loss due to a decline in value of its motor carrier operating authority by reason of deregulation.
“(d) Application of Section 334(b)(2).--For purposes of subsections (a) and (b), the reference to section 334(b)(2) in section 266(c)(2)(A)(ii) of the Economic Recovery Tax Act of 1981 [section 266(c)(2)(A)(ii) of Pub. L. 97-34, set out as a note below] shall be a reference to such section as in effect before its repeal.
“(e) Effective Dates.--
“(1) Bus operating authority.--
“(A) In general.--Subsection (a) shall apply to taxable years ending after November 18, 1982.
“(B) Statute of limitations.--If refund or credit of any overpayment of tax resulting from subsection (a) is prevented at any time on or before the date which is 1 year after the date of the enactment of this Act [Oct. 22, 1986] by the operation of any law or rule of law (including res judicata), refund or credit of such overpayment (to the extent attributable to the application of such subsection) may, notwithstanding such law or rule of law, be made or allowed if claim therefore [sic] is filed on or before the date which is 18 months after such date of enactment.
“(2) Freight forwarder operating authority.--Subsection (b) shall apply to taxable years ending after the month preceding the deregulation month.”
DEDUCTION FOR MOTOR CARRIER OPERATING AUTHORITY
Pub. L. 97-34, title II, 266, Aug. 13, 1981, 95 Stat. 265, as amended by Pub. L. 97-424, title V, 517(a), Jan. 6, 1983, 96 Stat. 2183; Pub. L. 97-448, title I, 102(n), Jan. 12, 1983, 96 Stat. 2374; Pub. L. 99-514, 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
“(a) General Rule.--For purposes of chapter 1 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] [this chapter], in computing the taxable income of a taxpayer who, on July 1, 1980, held one or more motor carrier operating authorities, an amount equal to the aggregate adjusted basis of all motor carrier operating authorities held by the taxpayer on July 1, 1980, or acquired subsequent thereto pursuant to a binding contract in effect on July 1, 1980, shall be allowed as a deduction ratably over a period of 60 months. Such 60-month period shall begin with the month of July 1980 (or if later, the month in which acquired), or at the election of the taxpayer, the first month of the taxpayer's first taxable year beginning after July 1, 1980.
“(b) Definition of Motor Carrier Operating Authority.--For purposes of this section, the term ‘motor carrier operating authority’ means a certificate or permit held by a motor common or contract carrier of property and issued pursuant to subchapter II of chapter 109 of title 49 of the United States Code.
“(c) Special Rules.--
“(1) Adjusted basis.--For purposes of the Internal Revenue Code of 1986, proper adjustments shall be made in the adjusted basis of any motor carrier operating authority held by the taxpayer on July 1, 1980, for the amounts allowable as a deduction under this section.
“(2) Certain stock acquisitions.--
“(A) In general.--Under regulations prescribed by the Secretary of the Treasury or his delegate, and at the election of the holder of the authority, in any case in which a corporation--
“(i) on or before July 1, 1980 (or after such date pursuant to a binding contract in effect on such date), acquired stock in a corporation which held, directly or indirectly, any motor carrier operating authority at the time of such acquisition, and
“(ii) would have been able to allocate to the basis of such authority that portion of the acquiring corporation's cost basis in such stock attributable to such authority if the acquiring corporation had received such authority in the liquidation of the acquired corporation immediately following such acquisition and such allocation would have been proper under section 334(b)(2) of such Code, the holder of the authority may, for purposes of this section, allocate a portion of the basis of the acquiring corporation in the stock of the acquired corporation to the basis of such authority in such manner as the Secretary may prescribe in such regulations.
“(B) Treatment of certain noncorporate taxpayers.--Under regulations prescribed by the Secretary of the Treasury or his delegate, and at the election of the holder of the authority, in any case in which--
“(i) a noncorporate taxpayer or group of noncorporate taxpayers on or before July 1, 1980, acquired in one purchase stock in a corporation which held, directly or indirectly, any motor carrier operating authority at the time of such acquisition, and
“(ii) the acquisition referred to in clause (i) would have satisfied the requirements of subparagraph (A) if the stock had been acquired by a corporation, then, for purposes of subparagraphs (A) and (C), the noncorporate taxpayer or group of noncorporate taxpayers referred to in clause (i) shall be treated as a corporation. The preceding sentence shall apply only if such noncorporate taxpayer (or group of noncorporate taxpayers) on July 1, 1980, held stock constituting control (within the meaning of section 368(c) of the Internal Revenue Code of 1986) of the corporation holding (directly or indirectly) the motor carrier operating authority.
“(C) Adjustment to basis.--Under regulations prescribed by the Secretary of the Treasury or his delegate, proper adjustment shall be made to the basis of the stock or other assets in the manner provided by such regulations to take into account any allocation under subparagraph (A).
“(3) Section 381 of the internal revenue code of 1986 to apply.--For purposes of section 381 of the Internal Revenue Code of 1986, any item described in this section shall be treated as an item described in subsection (c) of such section 381.
“(d) Effective Date.--The provisions of this section shall apply to taxable years ending after June 30, 1980.”
[Section 517(b) of Pub. L. 97-424 provided that: “The amendment made by subsection (a) [adding subsec. (c)(2)(B) of this note] shall apply to taxable years ending after July 30, 1980."]
TAX TREATMENT OF CERTAIN 1972 DISASTER LOANS
Section 2103 of Pub. L. 94-455, as amended by Pub. L. 99-514, 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
“(a) Application of Section.--This section shall apply to any individual--
“(1) who was allowed a deduction under section 165 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (relating to losses) for a loss attributable to a disaster occurring during calendar year 1972 which was determined by the President, under section 102 of the Disaster Relief Act of 1970, to warrant disaster assistance by the Federal Government.
“(2) who in connection with such disaster--
“(A) received income in the form of cancellation of a disaster loan under section 7 of the Small Business Act [section 636 of Title 15, Commerce and Trade] or an emergency loan under subtitle C of the Consolidated Farm and Rural Development Act [section 1961 et seq. of Title 7, Agriculture], or
“(B) received income in the form of compensation (not taken into account in computing the amount of the deduction) for such loss in settlement of any claim of the taxpayer against a person for that person's liability in tort for the damage or destruction of that taxpayer's property in connection with the disaster, and
“(3) who elects (at such time and in such manner as the Secretary of the Treasury or his delegate may by regulations prescribe) to take the benefits of this section.
“(b) Effect of Election.--In the case of any individual to whom this section applies--
“(1) the tax imposed by chapter1 of the Internal Revenue Code of 1986 for the taxable year in which the income taken into account is received or accrued which is attributable to such income shall not exceed the additional tax under such chapter which would have been payable for the year in which the deduction for the loss was taken if such deduction had not been taken for such year,
“(2) any amount of tax imposed by chapter 1 attributable to the income taken into account which, on October 1, 1975, was unpaid may be paid in 3 equal annual installments (with the first such installment due and payable on April 15, 1977), and
“(3) no interest on any deficiency shall be payable for any period before April 16, 1977, to the extent such deficiency is attributable to the receipt of such compensation, and no interest on any installment referred to in paragraph (2) shall be payable for any period before the due date of such installment.
“(c) Income Taken Into Account.--For purposes of this section, the income taken into account is--
“(1) in the case of an individual described in subsection (a)(2)(A), the amount of income (not in excess of $5,000) attributable to the cancellation of a disaster loan under section 7 of the Small Business Act or an emergency loan under subtitle C of the Consolidated Farm and Rural Development Act received by reason of the disaster described in subsection (a)(1), or
“(2) in the case of an individual described in subsection (a)(2)(B), the amount of compensation (not in excess of $5,000) for the loss in settlement of any claim of the taxpayer against a person for that person's liability in tort for the damage or destruction of that taxpayer's property in connection with the disaster described in subsection (a)(1).
“(d) Phaseout Where Adjusted Gross Income Exceeds $15,000.--If for the taxable year for which the deduction for the loss was taken the individual's adjusted gross income exceeded $15,000, the $5,000 limit set forth in paragraph (1) or (2) of subsection (c) (whichever applies) shall be reduced by one dollar for each full dollar that such adjusted gross income exceeds $15,000. In the case of a married individual filing a separate return, the preceding sentence shall be applied by substituting ‘$7,500’ for ‘$15,000’.
“(e) Statute of Limitations.--If refund or credit of any overpayment of income tax resulting from an election made under this section is prevented on the date of the enactment of this Act [Oct. 4, 1976], or at any time within one year after such date, by the operation of any law, or rule of law, refund or credit of such overpayment (to the extent attributable to such election) may, nevertheless, be made or allowed if claim therefor is filed within one year after such date. If the taxpayer makes an election under this section and if assessment of any deficiency for any taxable year resulting from such election is prevented on the date of the enactment of this Act [Oct. 4, 1976], or at any time within one year after such date, by the operation of any law or rule of law, such assessment (to the extent attributable to such election) may, nevertheless, be made if made within one year after such date.”
REFUND OR CREDIT OR OVERPAYMENT; TIME FOR FILING CLAIM; INTEREST
Section 1(b)(2) of Pub. L. 91-677 authorized refund or credit of overpayment attributable to the amendments made by subsec. (a) to subsec. (i) of this section if claim therefor was filed after Jan. 12, 1971, and before July 1, 1971, without interest for any period before Jan. 1, 1972.