I’m at a Loss: Tax Treatment of Individual Taxpayer Losses

The Internal Revenue Code imposes a variety of limitations and obstacles to individual taxpayers’ ability to deduct certain types of losses. There are generally three different types of losses covered in this practice note: casualty and theft; net operating; and investment.  While all three are important, the rate at which taxpayers have claimed casualty losses has been exacerbated by natural disasters and other weather-related events in recent years. Notably, the U.S. experienced 18 separate weather and climate disasters in 2022 at a cost of $165 billion (businesses and individuals). Learn more about the different types of losses and your ability to deduct them.

Read now »

Related Content

• Capital Gains and Losses: Basic Elements
  Learn more about the elements required for a sale of property to constitute a capital transaction. This practice note provides best practices for your client by describing proper classification of property items as capital assets. It also reviews the requirements for a transaction to qualify as a sale or exchange and examines the different rules for individuals and corporations governing the carryover of unused capital losses.

• Pass-Through Entities Taxation
  See how flow-through is the word. Many business structures are partnerships and LLCs, or S-corporations, which permit pass-through of losses and income items, to create tax efficiencies for their owners.

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account.    

• Tax Key Legal Developments Tracker (Federal)
  • Individual Income Tax. IRS issues fact sheet, noting that money received through "crowdfunding" may be taxable and that taxpayers should understand their obligations and the benefits of good recordkeeping.FS-2022-20
  • Exempt Organizations. IRS announces it is suspending issuance of several notices generally mailed to tax-exempt or governmental entities in case of delinquent returns. Due to the pandemic, the IRS hasn't yet processed several million returns filed by individuals and entities. The suspension of notifications will help avoid confusion when a filing is still in process. IRS Exempt Organizations Update.
• Document alerts allow you to stay current on legal developments that affect your practice. Find out how to set up your document alerts. 
• The Practical Guidance Journal Climate Change Special Edition features guidance on insuring for climate change, renewable energy initiatives, and a guide for public and private projects related to sea level rise.
• Legal Developments provide the latest updates and analyses of emerging topics impacting your practice area. Visit the Legal Developments page to see the latest topics, which also include breaking legal news and related Practical Guidance content. 
• Listen Up! The Practical Guidance and Law360 Podcasts Resource Kit features interviews with industry-leading attorneys on cutting edge issues in the law: NFTs, Cannabis, Mass Torts, and more.
• Check out the new Practical Guidance Author Center! Learn about the 1750+ leading attorney authors contributing to our 22 practice areas and find out how you can Become a Practical Guidance Author. 

• New and Recently Updated Practical Guidance Content
  • International Taxation Resource Kit
  • IRS Form 1120 (U.S. Corporation Tax Return): Guidance for Completing, Filing, and Amending
  • IRS Form 990: Guidance for Completing, Filing, and Amending
  • Economic Hardship Considerations in IRS Tax Collection

Experience results today with practical guidance, legal research, and data-driven insights—all in one place.

Experience Lexis+