(a)
(1) In computing net income there shall be allowed as a deduction any loss sustained during the income year and not compensated for by insurance or otherwise.
(2) In the case of an individual, the deduction under subdivision (a)(1) of this section shall be limited to:
(A) Losses incurred in a trade or business; or
(B) Losses incurred in any transaction entered into for profit, though not connected with the trade or business, including without limitation gambling losses, which are:
(i) Deductible to the extent of gambling winnings; and
(ii) Not subject to the two percent (2%) limitation on miscellaneous itemized deductions.
(b) Title 26 U.S.C. § 165(h) and (i), as in effect on January 1, 2009, regarding losses arising from a casualty or a disaster, are adopted for the purpose of computing Arkansas income tax liability.
(c) Title 26 U.S.C. § 183, as in effect on January 1, 1999, regarding hobby losses, is adopted for the purpose of computing Arkansas income tax liability.
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