Is there an audit technique guide to assist in the preparation of casualty losses?
No, but there is other IRS-issued guidance to help taxpayers determine and report disaster-related casualty losses. See, Publication 584, Casualty, Disaster and Theft Loss Workbook. Also see, Internal Revenue Manual Section 4.10.7.3, Evaluating Evidence, and Section 4.10.7.4, Arriving at Conclusions. (12/15/09) Q. According to Treas. Reg. 1.165-7(a)(2)(ii), the cost of making repairs to restore property to its original condition can be used as a measure of the decrease in the FMV of the property. If the repairs have not yet been made but the taxpayer received an estimated cost of the repairs, can the taxpayer report the estimated cost on the taxpayer’s return. A: No. To be able to use the cost of repairs method to determine the decrease in FMV of a property, the repairs must have been made by the due date of the tax return. If the repairs have not been made, the taxpayer should file the return without reporting the casualty loss information. After the repairs have been made, the taxpay
