Net casualty loss capped at 10% of AGI, allowable only to extent of personal casualty gains for such year.
Recognized gain is amount of realized gain included in gross income. Generally, entire realized gain is recognized. §1001(c)
Exceptions which allow postponement of gain or loss (detailed later).
Capital or ordinary gain – turns on nature of asset, holding period, sale or exchange transaction. Capital gains generally have better tax treatment but ordinary losses are preferred because they are not limited as capital losses are.