What this line means
A description of business or income-producing property that was damaged, destroyed, or stolen. Section B covers property used in your trade or business, rental property, and property held for investment. Unlike personal-use property (Section A), business property casualty losses are not limited to federally declared disasters and are not subject to the $100 per-event or 10% AGI rules.
Does this apply to you?
- You had business equipment, vehicles, or other trade-or-business property damaged or stolen
- You had rental property damaged or destroyed by a casualty
- You had investment property (not personal-use) that was stolen or destroyed
- You need to report a casualty loss on property used for income production
Easy to overlook
Business property losses bypass the $100 and 10% AGI limitations The $100 per-event floor and 10% of AGI reduction apply only to personal-use property in Section A. Business and income-producing property losses go through Section B, which has no such limitations. The full unreimbursed loss is deductible as a business loss, subject to basis and depreciation rules. 1 IRS Publication 547 — Casualties, Disasters, and Thefts
Mixed-use property must be split between Section A and Section B If property is used partly for business and partly for personal use (like a home office), allocate the casualty loss between the two sections based on the percentage of business use. The business portion goes in Section B with no $100 or AGI reduction. The personal portion goes in Section A with all the limitations. 2 IRS Form 4684 instructions — Section B
Watch out for this
Reporting a business property loss in Section A instead of Section B. Section A has the $100 per-event floor and 10% AGI limitation that do not apply to business property. Placing a business loss in Section A subjects it to unnecessary reductions and understates your deduction. Check whether the property was used in a trade or business, for rental income, or for investment before choosing the section.
Footnotes
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IRS Publication 547, Casualties, Disasters, and Thefts, Business Property. https://www.irs.gov/pub/irs-pdf/p547.pdf ↩
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IRS Form 4684 Instructions, Section B. https://www.irs.gov/instructions/i4684 ↩