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Casualty Losses and Form 4684: Federal Disaster Relief, Section 1033 Involuntary Conversions

Deducting California Wildfire Losses, COVID-19 Disaster Relief, Ponzi Scheme Losses

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, June 29, 2021

Recorded event now available

or call 1-800-926-7926

This course will cover deducting casualty losses inside and outside of federally declared disaster areas. Our income tax veteran will describe common casualty loss scenarios, including California wildfire losses, eligibility for COVID-19 disaster loss relief, and Section 1033 involuntary conversions for tax professionals and business owners.


Although the Tax Act of 2017 eliminated personal casualty loss deductions for the years 2018-2025, business casualty losses remain deductible, and personal losses within federally declared disaster areas remain deductible. The Stafford Act expanded opportunities for loss deductions under IRC Section 165(i) by declaring the entire United States a federal disaster area due to COVID-19. On top of COVID-19 relief, there are four pages of federally declared disaster areas relative to the California wildfires alone and additional disaster area designations for severe storms, hurricanes, earthquake relief, etc., across the nation.

Defining what constitutes an eligible loss is not clear since 165(i) was written with hurricanes, fires, and earthquakes in mind and before the national pandemic. What is clear is that certain losses from vandalism, inventory loss, and other permanent damages are deductible and, under these new guidelines, can be deducted in the year proceeding COVID or for the 2020 tax year.

Tax practitioners continue to struggle with the calculations of the deductible portion of losses from these life-altering events. Insurance proceeds, settlements, and other relief received rightly alter the deductibility of losses. Calculating depreciation and the basis of the replacement property and preparing Form 4684 provide additional challenges as well.

Listen as Lawrence K.Y. Pon, CPA/PFS, CFP, EA, USTCP, AEP at Pon & Associates, explains eligibility for this deduction, calculating deductible losses, and timing the deduction of these benefits. Tax advisers need to understand what is known about available disaster relief for losses caused by COVID-19 and grasp existing rules for the deductibility of these losses to obtain maximum tax savings for individuals and businesses struggling to survive and recover from recent disasters.



  1. Casualty losses
    1. Personal
    2. Business
  2. Timing the loss deduction
  3. Calculating the loss and deduction
  4. Section 1033 involuntary conversions
  5. Insurance proceeds, settlements, other relief payments
  6. Depreciation of replacement property
  7. Federal disaster relief
  8. COVID-19 and disaster relief
  9. Preparing Form 4684


Our panelist will review these and other critical issues:

  • Properly preparing Form 4684, Casualties and Thefts
  • Calculating casualty loss deductions from California wildfires
  • Deducting losses from Ponzi schemes
  • Eligible disaster and casualty losses
  • Timing casualty losses deductions
  • The impact of insurance reimbursements and settlements loss deductions


Pon, Lawrence
Lawrence K.Y. Pon, CPA/PFS, CFP, EA, USTCP, AEP

Tax Attorney
Pon & Associates

Mr. Pon has been in practice since 1986 providing comprehensive tax and financial planning, tax preparation and...  |  Read More

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