Line 3

Enter the amount of insurance or other reimbursement you received or expect to receive for each property. Include your insurance coverage whether or not you are filing a claim for reimbursement.

Example: Your car worth $2,000 is totally destroyed in a collision. You are insured with a $500 deductible but decide not to report it to your insurance company because you are afraid the insurance company will cancel your policy. In this example, enter $1,500.

If you expect to be reimbursed but have not yet received payment, you must still enter the expected reimbursement from the loss. If, in a later tax year, you determine with reasonable certainty that you will not be reimbursed for all or part of the loss, you can deduct for that year the amount of the loss that is not reimbursed.

Types of reimbursements: Insurance is the most common way to be reimbursed for a casualty or theft loss, but if:

the person who leases your property must make repairs or must repay you for any part of a loss, the repayment and the cost of the repairs are considered reimbursements.

a court awards you damages for a casualty or theft loss, the amount you can collect, minus lawyers’ fees and other necessary expenses, is a reimbursement.

you accept repairs, restoration, or cleanup services provided by relief agencies, it is considered a reimbursement.

a bonding company pays you for a theft loss, the payment also is considered a reimbursement.

Lump-sum reimbursement: If you have a casualty or theft loss of several assets at the same time and you receive a lump-sum reimbursement, you must divide the amount you receive among the assets according to the FMV of each asset at the time of the loss.

Grants, gifts, and other payments: Grants and other payments you receive to help you after a casualty are considered reimbursements only if they must be used specifically to repair or replace your property. Such payments will reduce your casualty loss deduction. If there are no conditions on how you must use the money you receive, it is not a reimbursement.

Use and occupancy insurance: If insurance reimburses you for your loss of business income, it does not reduce your casualty or theft loss. The reimbursement is income and is taxed in the same manner as your business income.

Main home destroyed: If you have a gain because your main home was destroyed, you generally can exclude the gain from your income as if you had sold or exchanged your home. You may be able to exclude up to $250,000 of the gain (up to $500,000 if married filing jointly). To exclude a gain, you generally must have owned and lived in the property as your main home for at least two years during the five-year period ending on the date it was destroyed. For information on this exclusion, see Itemized deductions and review the 2017 IRS Publication 523, Selling Your Home .

If you exclude the gain and the entire gain is excludable, do not calculate the casualty on the Casualty and theft worksheet . If the gain is more than you can exclude, reduce the insurance or other reimbursement by the amount of the exclusion and enter the result on line 3. In your tax records, keep a statement showing the full amount of insurance or other reimbursement and the amount of the exclusion. You may be able to postpone reporting the excess gain if you buy replacement property. See Itemized deductions and review the 2017 IRS Publication 547.