Get the Maximum Benefit from a Casualty Loss Deduction1 min read
Typically, you claim a casualty loss in the taxable year the disaster happens. But, if you’re in a federally declared disaster area, amending your prior year return is an option. To receive the maximum benefit in either case the amount of your loss will need to be calculated. The following guidelines can help you prepare.
File an insurance claim. File a timely claim for your property with your insurance company.
Get an appraisal. The decline in fair market value caused by the casualty will be determined by an appraisal. The tax rules require that you measure the difference between what your home or property would have sold for before the damage and what it was likely to sell for after the damage.
Establish basis. Adjusted basis is what you originally paid for the damaged property, plus any improvements that were made. You may have to recreate them using reasonable estimates or the best information you have if your records were lost in the casualty.
Keep receipts for repairs. Sometimes, repairs you make to restore your property to pre-casualty condition can be used as an indicator of the decline in the fair market value of the property.
If you need additional guidance, please give us a call. We are here to help you resolve any tax issues in the aftermath of a casualty.
Here are a few additional articles you might be interested in:
Work Life Balance. . . Innovative Culture . . . Variety If you are a tax accountant with 5 years of accounting experience and this sounds intriguing, check this out. Work/life balance is a top priority with our team. We provide a family-friendly work environment with...read more
Work Life Balance. . . Innovative Culture . . . Variety If you are an accountant with 10-15 years of accounting experience and this sounds intriguing, check this out. Work/life balance is a top priority with our team. We provide a family-friendly work environment with...read more
No one starts a business hoping that it will fail, yet a quick check of business statistics shows that half of all businesses will. Large businesses have teams of experts who comb through complex reports to make decisions that affect hundreds of employees and ensure...read more