Other Miscellaneous Deductions Not Subject to 2% Limit
Other miscellaneous deductions that are not subject to the 2% of AGI limit are reported on line 27 of Schedule A. The following are expenses that fit into this category.
You can deduct the amortizable premium on bonds. The bond premium is the excess you pay for the bond over its stated principal amount. Normally the premium is amortized as an offset against interest income on the bond. But the amortization of the premium on bonds acquired on or before October 23, 1986 is treated as a miscellaneous itemized deduction, not subject to the 2% of AGI limit. The amortization of premium on bonds acquired after October 22, 1986 but before 1988 is treated as investment interest expense, subject to the limits that apply on investment interest. If you chose to amortize the premiums on taxable bonds you acquired before 1998, you can deduct the amount of bond premium amortization that exceeds your interest income only for bonds you acquired during 1998 and later.
Casualty and theft losses from income-producing property, such as securities, works of art, precious metals, and vacant lots can be taken as a miscellaneous deduction. You would first have to report the loss on Form 4684, and if you have to file Form 4797, you would also include it there. There are different types of deductions for casualties and thefts:
The casualty and theft losses reported here under miscellaneous deductions not subject to the 2% of AGI limit are on income-producing property, or property held for investment.
The losses mentioned above, that are subject to the 2% of AGI limit, are casualty and theft losses on property used to perform your services as an employee.
Casualty and theft losses on personal property, if they qualify, would be deductible in the separate category of itemized deductions for casualty and theft losses.
Business casualties and thefts would be reported on Form 4797.