How can individuals deduct a loss on a deposit in a qualified financial institution on their tax returns? Question content area bottom

A taxpayer may elect to treat the loss on deposits in qualified financial institutions as a personal casualty loss in the year in which the loss can be reasonably estimated. By treating the loss as a personal casualty loss, the total loss is reduced by 10% of the taxpayer's AGI.

B. Individuals may treat a loss on deposits in qualified financial institutions as a nonbusiness bad debt in the year the loss occurs. If no election is made, the loss is treated as a personal casualty loss subject to long-term or short-term capital loss rules.

C. Individuals may treat a loss on deposits in qualified financial institutions as a loss against AGI for the year, not to exceed 25% of overall AGI.

D. Individuals may treat a loss on deposits in qualified financial institutions as a long-term capital loss in the year the financial institution is declared bankrupt. The taxpayer may also elect short-term capital loss treatment if the taxpayer has short-term capital gains for the year.