Generally, a cash-basis taxpayer does not report income until cash is constructively or actually received. Cash Method of Accounting One of the two most common methods of accounting, the other being the accrual method defined elsewhere in this glossary. Under the cash method of accounting, income is reported in the tax year actually or constructively received and expenses are deducted in the tax year paid. Casualty The complete or partial destruction of property resulting from an identifiable event of a sudden, unexpected, or unusual nature. Casualty Loss A casualty is the complete or partial destruction of property resulting from an identifiable event of a sudden, unexpected, or unusual nature.
Examples are floods, storms, fires, earthquakes, and auto accidents.
Individuals may deduct a casualty loss only if the loss is incurred in a trade or business, in a transaction entered into for profit, or is a personal loss arising from a disaster such as those mentioned above. Use of Form 4684 is required. The actual piece of paper that is evidence of ownership of stock in a corporation. A structure listed on the National Register of Historic Places or located in a designated historic area. The IRS Code provides tax incentives for the rehabilitation of such structures.