How to Calculate the Loss of Damaged Clothing

Damaged clothing does not have high value.

A casualty loss is when your property drops in value. If clothing gets damaged the value will most likely drop to zero. You can take a casualty loss on your taxes for the drop in fair market value of your goods at the time of the loss. It is hard to establish fair market value of goods, but if you have regular clothing, then you should use a guide such as the Goodwill's clothing valuation, located in the resources, to determine your loss.

Instructions

1. Determine what clothes were damaged. For example, say you have a damaged men's suit and men's sweats.

2. Find the fair market value of the clothes. In the example, if you use the Goodwill's value chart, then a suit has a fair market value of $30 and men's sweats have a value of $12. So the total fair market value is $42. You can use other sources to find a fair market value, but the choice of source must be reasonable. This may better for higher end clothes which have more of a secondhand resale value.

3. Subtract any reimbursements or money you receive for the clothes from the fair market value of the clothes. In the example, assume your insurance pays you $2, so $42 minus $2 equals a loss of $40.

Tips & Warnings

• You can also use the adjustment basis of your clothing instead of the fair market value. In order to do this, you need to depreciate the clothing. However, clothing has a short depreciation life, so it may not be worth the hassle.

References

• University of Missouri: Casualty Taxation Tidbits

Resources

• Goodwill: Valuation Guide for Goodwill Donors