18.18 Do Your Casualty or Theft Losses Exceed Your Income?

If your 2012 casualty or theft losses exceed your income for the year, you pay no tax for 2012. Under the net operating loss (NOL) rules (40.18), you may carry back the excess casualty or theft loss three years and forward 20 years. Thus, an excess casualty or theft loss for 2012 can be carried back three years to 2009 and you can claim a refund for that year. Any balance of the 2012 loss (not applied to 2009) can be carried back to 2010 and 2011 and then forward 20 years to 2013 through 2032.

The $100 floor (18.12) and the 10% of adjusted gross income floor (18.12) for personal casualty or theft losses apply only in the year of the loss; you do not again reduce your loss in the carryback or carryforward years.