How should individuals treat a loss on a qualified financial institution?

A.

Individuals may treat a loss on deposits in qualified bankrupt or insolvent 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.

B.

Individuals may treat a loss on deposits in qualified bankrupt or insolvent financial institutions as a personal casualty loss in the year in which the individual can reasonably estimate the loss.

C.

Individuals may treat a loss on deposits in qualified bankrupt or insolvent 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 bankrupt or insolvent 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.