nkr31 --
At the outset, I must emphasize that Google researchers are not
authorized to give legal or accounting advice, so please understand
that this answer is intended to be informational only.
Having said that, information on the issue raised by your first
question is addressed quite directly by the IRS in Chapter 27 of
Publication 17, which generally deals with "nonbusiness casualty and
theft losses." Here is what it has to say about the deductibility of
losses for leased property:
"Casualty loss proof. For a casualty loss, your records should show
all the following.
? The type of casualty (car accident, fire, storm, etc.) and when it occurred.
? That the loss was a direct result of the casualty.
? That you were the owner of the property or, if you leased the
property from someone else, that you were contractually liable to the
owner for the damage. "
Here is a link to the full text of Chapter 27 of that IRS document:
IRS: Publication 17, Chapter 27
http://www.irs.gov/publications/p17/ch27.html
If you have any doubt about your ability to document your "contractual
liability" to the rental car company, you should seek professional
advice, but that liability is likely addressed quite clearly in the
terms of your car rental agreement.
The notion that the IRS will recognize the deductibility of a casualty
loss for damage to a rented car if all of the other requirements for
such a deduction met is supported by this statement of a prominent
risk management consultant:
"Finally, people who rent autos need to be told that collision damage
coverage should not be waived unless the person renting the auto also
maintains collision coverage on his or her own auto. When the waiver
is selected, the renter will then have to assume the difference
between the deductible applicable to the rental and to the renter's
own auto policy. When an individual waives the collision coverage and
there is no other collision coverage available under the renter's auto
policy, the entire amount of the deductible must be assumed. At least
it may be tax deductible."
Rough Notes: Risk Management, by Donald S. Malecki, CPCU
http://www.roughnotes.com/rnmag/april/p38.htm
As for your second question, I must remind you again that we
researchers are not authorized to give legal or accounting advice, but
I think that you will find the same IRS document to be helpful to you
in determining which number it would be reasonable for you to use for
your Form 4684. Here is what it has to say:
"Leased property. If you are liable for casualty damage to property
you lease, your loss is the amount you must pay to repair the property
minus any insurance or other reimbursement you receive or expect to
receive."
IRS: Publication 17, Chapter 27
http://www.irs.gov/publications/p17/ch27.html
Note that the IRS's published advice indicates that the deductible
amount is "the amount you must pay to repair" the vehicle. The IRS,
of course, will decide (if you are audited) whether you have
documented satisfactorily the company's conclusion that the car was in
fact a "total loss" and whether the amount you paid was reasonable.
If you need or want a judgment as to of what IRS staff might decide on
your particular facts (which might be difficult to do in advance), you
might want to consider a brief consultation with an accountant on that
question alone.
Search Strategy:
I used various Google searches to find the information and to develop
reasonable confidence that the information is correct. The most
useful of these searches, among many others, was this one:
"casualty loss OR losses" property deduct OR deductible lease OR rent
://www.google.com/search?hl=en&lr=&ie=UTF-8&safe=off&c2coff=1&q=%22casualty+loss+OR+losses%22++property+deduct+OR+deductible+lease+OR+rent
I am hopeful that this information is useful to you. If anything is
unclear, please ask for clarification before rating the answer.
markj-ga |