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Per IRS Publication 17 Your Federal Income Tax (For Individuals), page 170:

Reimbursement Received After Deducting Loss

If you figured your casualty or theft loss using your expected reimbursement, you may have to adjust your tax return for the tax year in which you receive your actual reimbursement. This section explains the adjustment you may have to make.

Actual reimbursement less than expected. If you later receive less reimbursement than you expected, include that difference as a loss with your other losses (if any) on your return for the year in which you can reasonably expect no more reimbursement.

Example. Your personal car had a FMV of $2,000 when it was destroyed in a collision with another car in 2014. The accident was due to the negligence of the other driver. At the end of 2014, there was a reasonable prospect that the owner of the other car would reimburse you in full. You did not have a deductible loss in 2014.

In January 2015, the court awards you a judgment of $2,000. However, in July it becomes apparent that you will be unable to collect any amount from the other driver. You can deduct the loss in 2015 subject to the limits discussed later in Publication 17.

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