What is a Casualty Loss?
A casualty loss has to do with the loss of property through a set of circumstances that are unanticipated. In many instances, a casualty loss comes about due to some sort of natural disaster. In other situations, a casualty loss occurs as a result of some sort of accident. Both individuals and businesses may claim a casualty loss on annual tax returns, if the circumstances surrounding the loss meet the qualifications relative to the deduction. One of the more common reasons for claiming a casualty loss are the result of some sort of natural disaster. Property, such as buildings, vehicles, farming land, and other physical assets that are used as part of the operation of a business for profit, may be partially damaged or completely destroyed. Just about any type of natural phenomenon can be involved in the declaration of a casualty loss. Floods, tornadoes and hurricanes, lighting storms, or earthquakes could all set the stage for the destruction of property and the proper claim of a casu
A casualty loss is damage, destruction or loss of property from any sudden, unexpected and unusual event. Casualties can include fire, flood, hurricane, tornado, and earthquakes. The casualty loss is calculated as follows: market value of property immediately before the casualty, less the sum of: a) market value immediately after the casualty and b) insurance proceeds. I’m Insured. Do I Qualify? A frequent misconception is the owner of insured property does not qualify for a casualty loss. This simply is not true. Even if insurance proceeds fully fund restoration, the owner probably qualifies for a casualty loss. The casualty loss is really only subject to casualty loss limitations ($100 per casualty and in excess of 10% of adjusted gross income for personal-use property). I get a deduction even if fully insured? Yes, because of the procedure for calculating the casualty loss. The difference in value before and after the casualty is more than the cost of repairs. Let’s consider an exam
A casualty loss is damage, destruction or loss of property from any sudden, unexpected and unusual event. Casualties can include fire, flood, hurricane, tornado, and earthquakes. The casualty loss is calculated as follows: market value of property immediately before the casualty, less the sum of: a) market value immediately after the casualty and b) insurance proceeds. For a major casualty such as Hurricane Ike, in a presidentially-declared disaster area, the deduction can be used in either the current or preceding tax year. Discuss your tax situation with your CPA or tax return preparer. I’m Insured. Do I Qualify? A frequent misconception is the owner of insured property does not qualify for a casualty loss. This simply is not true. Even if insurance proceeds fully fund restoration, the owner probably qualifies for a casualty loss. The casualty loss is really only subject to casualty loss limitations ($100 per casualty and in excess of 10% of adjusted gross income for personal-use pro
A casualty loss is a loss that is caused by natural or other external forces in a sudden, unexpected and unusual manner. Theses three words-sudden, unexpected, unusual-are very important and you should understand their meaning. A sudden event is one that is not gradual or progressive. An unexpected event is one that is not ordinarily anticipated or that you do not intend to happen. An unusual event is one that is not an every day occurrence or not typical to the activity in which you are engaged. For timber that is held for the production of income as either a business or investment the recent ice storms would be a casualty loss. When is the loss recognized? The tax year in which the event occurred. How much is my loss? This will vary from taxpayer to taxpayer. Generally your loss for timber that is held for the production of income as either a business or investment is the lesser of the difference between the fair market value of the timber before and after the storm or your basis in
