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Question: Recently on a trip to Columbia all of my luggage including some valuable family items were lost by the airline. The airline says I am only entitled to $500 reimbursement – is it possible to make this a tax deduction of some sort?

Answer: Perhaps.  Here are some of the rules about a casualty loss:  it must be a sudden, unexpected or unusual.  The loss must be taken in the year you discovered the loss  (not the year insurance reimbursed you — or turned you down).

If your suitcase was full of business equipment and samples, you would have one kind of loss.  If your luggage contained personal items such as toiletries, jewelry, clothing, and shoes you will have another kind of loss.

You might encounter two kinds of problems:

a.) Remembering all that the luggage contained, and the luggage itself. (You’ll need a list)

b.) Placing a value on each item.  You will say when you got it, how you got it, and the fair      market value of the item on the day you lost it.  So, let’s take a few things that might have been lost:

1.)  3 new sweaters –bought this month at L.L. Bean  $49.95 each. 

Please continue reading I lost my luggage – can it be a tax deduction (casualty losses)