Mary suffered uninsured casualty losses of $25,000. What amount can she deduct on her income tax return?

In order to address the deductibility of Mary’s uninsured casualty losses on her income tax return, it is important to understand the rules governing casualty loss deductions as established by the IRS.

A taxpayer can only deduct a casualty loss if the loss is from a federally declared disaster. In situations that do not involve a federally declared disaster, typically, uninsured casualty losses are not eligible for deduction on the federal income tax return. Since Mary’s losses are uninsured and there is no indication that they are a result of a federally declared disaster, she would not be able to claim any of this loss as a deduction.

Therefore, the correct determination is that Mary can deduct $0 of her uninsured casualty losses.