Tax Deductions and Losses

These flashcards cover key concepts related to tax deductions and losses, focusing on different sections, rules, and requirements outlined in the notes.

If a stock or bond becomes completely worthless, the IRS treats it as if you sold it on __ of that year.

December 31

Under Section 1244, a corporation must have less than __ in capital at the time of issuing stock for losses to qualify.

$1 million

To qualify for Section 1244, the stock must be purchased directly from the __.

corporation

Section 1244 allows a maximum ordinary loss of __ per year for single filers.

$50,000

The personal-use casualty loss is deductible only if caused by a __ declared disaster.

federally

Under the TCJA, personal casual losses are extremely __.

restricted

When a business or rental property is partially destroyed, the deductible amount is the lesser of the decline in __ or adjusted basis.

FMV (fair market value)

The theft loss must be actual theft such as robbery, embezzlement, or __ taking.

fraudulent

If you expect insurance reimbursement, you cannot __ the loss yet.

deduct

For federally declared disaster losses, you may elect to deduct it on the __ year’s return.

prior

Personal casualty gains must be offset with personal casualty __.

losses

Excess business loss limitation for single filers is updated to __ for 2025.

$316,000

Research and experimental expenses post-2022 must be __ and amortized over 5 years.

capitalized

If losses exceed gains, the excess loss is subject to the __ rule.

$100

Under-insuring or not insuring property results in the IRS disallowing part of the __.

loss