question.jpgIn Federal Income Tax

What records do I need to prove a loss?

When you are claiming any casualty or theft loss as a deduction, you need records which prove the loss itself, as well as records establishing the value of that loss. In the case of a casualty loss, you should have records that show the type of event that cause the loss (for example, if your property was damaged by a storm or an earthquake, you could keep newspaper reports, or any police or fire reports). You should also have records showing that you owned the damaged property and/or were legally and contractually liable for it (such as leased property). To the extent possible, you should also have records showing the value of the property before and after the damage, such as written appraisals and documents proving the costs of repair, such as canceled checks, bills, receipts, etc. Finally, you should have documents addressing insurance claims and whether there has been any reimbursement or if there is a reasonable expectation of a reimbursement recovery.

You should have similar records for a theft loss. For example, you should have documents relating to the theft itself, such as witness statements and police reports, establishing when you discovered the lost/missed property and that there was a theft. You should also have documents establishing the value of the property and any possible reimbursements.