To calculate a loss on Form 4684, adhere to these steps.

• Outline the property that was damaged, destroyed, or stolen. Include specifics like its location and type (such as a property for personal or business use).
• Determining the Fair Market Value (FMV) of the property at the time of the casualty or theft and afterwards. The price the property would be sold for on the open market is known as FMV.
• Determine the property's adjusted basis: It's common for the adjusted basis to be the original cost plus improvements, minus depreciation.

To calculate the loss, subtract:

• Casualty or theft is the cause of the decrease in FMV.
• The property's basis has been altered.
• Reduce the calculated loss by subtracting any insurance payouts or reimbursements received.

Apply Limitations:

• Personal use property must have a $100 deduction for casualty events.
• In order to reduce the loss even further, reduce it by 10% of your adjusted gross income (AGI).

If you're itemizing deductions, enter the calculated loss on Form 4684 and transfer the allowable deduction to Schedule A when reporting.

Note: Remember that only losses caused by federally declared disasters are deductible for personal-use property.