Confiscation Loss Law and Legal Definition

Confiscation loss is a loss resulting from the confiscation or nationalization of a taxpayer's property. Confiscation loss is deductible in an income tax return.

The following is an example of a case law referring to confiscation loss:

Confiscation for tax purposes occurs when the taxpayer is actually deprived of the benefits of ownership. To decide when the taxpayer was deprived of ownership, courts generally look to when the taxpayer lost control and possession of the property and when he or she stopped receiving the revenues generated by the property. [Gouhari v. United States, 1998 U.S. Dist. LEXIS 13268 (D. Md. 1998)].