Tax deduction for shipwreck? - Mountain Buzz
 



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Old 02-19-2007   #1
 
Golden, Colorado
Join Date: Apr 2004
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Tax deduction for shipwreck?

I owe a lot of taxes this year so I'm thinking about taking the Casualties and Thefts deduction.

In TurboTax it says Examples of casualties include:
...
...
- Shipwrecks
...
...

Last year I wrapped my Embudo around a rock on the Encampment River and lost a bunch of stuff. Also, I cracked my neck in California and the paramedics cut about $750 worth of PFD, drytop, etc. off of me (lost my paddle too).

I'm thinking about $2000 is my deduction. What do you think?

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Old 02-19-2007   #2
 
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Eagle, Idaho
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Sounds like a loophole to me! You were on a "ship" it wrecked. Thankfully it was only your gear you lost (hope your recovery is going well).

I know there are a couple crazy tax people out there that can shed some light.

How about some lawyers too.......would that hold up??

I'm curious......
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Old 02-19-2007   #3
rhm
 
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steamboat springs, Colorado
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if you use these things for employment (are you employed as a safety boater, or a video kayaker for a rafting company?) then you might be able to write them off as a loss. if you are using them for fun i don't think you can.
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Old 02-19-2007   #4
 
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Glenwood Springs, Colorado
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The losses are probably valid; however, they are subject to limitations. $100 per 'incident' is deducted off the top, so you are only eligible for $1,800 after that. Then, it is only the amount by which you exceed 10% of AGI (Adjusted Gross Income, the bottom line on page 1 of your 1040). So... that means if your AGI is over 18k in 2006 you will not receive any benefit from the loss. (To go one step further, this amount is only deductible if you itemize as it is included on Schedule A, not page 1. If the property was insured, there are even more rules.)

Sorry, just the messenger. It's very rare that anyone can take this type of deduction b/c of the thresholds.

Let me know if you have any questions.

Laurie (aka TaxGeek)
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Old 02-19-2007   #5
 
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Glenwood Springs, Colorado
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Forgot to respond to the other point:

If you were employed as a safety boater or such, then the amounts were probably already deducted and you would have zero or reduced basis. The casualty loss rules are only for 'nonbusiness losses'. If the property was used in a trade or business, then they are not eligible for this type of loss. However, any remaining basis is a loss in the year of disposal on Schedule C (self-employed) or Form 2601 (unreimbursed employee business expenses).

Laurie
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Old 02-19-2007   #6
 
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Eagle, Idaho
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Good lord.....was that the short answer?? Loop hole closed, thanks Laurie. I guess it was a little far-fetched to think every boater could take a gnarly swim and deduct it!!

I think I'll still refer to the rest of my swims as shipwrecks though.
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