In 2007 I had a loss of $30,000. I expected reimbursement for $20,000. I filed 2007 taxes, used Form 4684: line 20 (cost or adj. basis) $30,000; line 21 (reimb.) $20,000; line 23 (FMV before): $30,000; line 24 (FMV after) $0. Thus, my loss (line 28) was $10,000. Today my claim for reimbursement is in court and I expect $10,000 at most.
Instructions to Form 4684 and Treasury Reg. 1.165-1(d)(2)(ii) say: “If, in a later tax year, you determine with reasonable certainty that you will not be reimbursed for all or part of the loss, you can deduct for that year the amount of the loss that is not reimbursed.”
I’ve determined with reasonable certainty that I will not be reimbursed for a part of the loss and want to deduct this additional amount of $10,000 on my 2008 taxes. What figures shall I enter in lines 20, 21, 23, 24 of Form 4684? Has my adjusted basis changed due to taking the deduction in 2007? Has the FMV (before or after) changed due to the benefit I received from the 2007 deduction?