J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

18.12 Floors for Personal-Use Property Losses

Casualty and theft losses attributable to personal-use property are subject to “floors” that will reduce, and in some cases eliminate, your deduction on Form 4684. Each casualty or theft loss (Steps 1–4 at 18.13) on personal-use property must be reduced by $100, and then the net loss for the year on all items of personal-use property is further reduced by 10% of your adjusted gross income.

Here are details for applying the $100 and 10% of adjusted gross income floors, which are taken into account when calculating your deductible loss in Step 5 at 18.13.

$100 floor for each loss.

Each casualty or theft loss of property used for personal purposes is reduced by $100. The $100 floor does not apply to losses of business property or property held for the production of income such as securities. If property used both in business and personal activities is damaged, the $100 offset applies only to the loss allocated to personal use.

For each casualty or theft in 2012, a separate $100 reduction applies. For example, if you are involved in five different casualties during the year, there will be a $100 offset applied to each of the five losses. But when two or more items of property are destroyed in one event, only one $100 offset is applied to the total loss. For example, a storm damages your residence and also your car parked in the driveway. You figure the loss on the residence and car separately on Form 4684, but only one $100 offset applies ...