Deducting Losses After a Disaster
Business Disaster Recovery Tips > Tax Information
As part of our article series on disaster recovery, we’ve shared some insights regarding how to get your business back to normal operation, which includes creating a response plan. After the devastating effects of Hurricane Harvey and Irma, business owners throughout the nation are struggling to put their lives back together. However, the IRS and some governmental programs are available for victims of these natural disasters. Taking advantage of these, while also using your existing Business Owners’ Policy can provide some financial relief.
If you suffered property damage or loss as a result of the recent hurricanes, you may be eligible to deduct losses. This rule also applies to theft, fire, vandalism, tornadoes and floods.
When to deduct.
As a general rule, you must deduct a casualty loss in the year it occurred. However, if you have a loss from a federally-declared disaster area, you may have a choice of when to deduct the loss. You can choose to deduct the loss on your return for the year the loss occurred or on an amended return for the immediately preceding tax year. Claiming a disaster loss on the prior year’s return may result in a lower tax for that year, often producing a refund, says the IRS.
Evaluate how much to deduct.
Calculating your loss is done by identifying how much the property was purchased for, determining the fair market value before and after the tragedy, and calculating how much insurance money you’ll receive to assist with the damage.
There are also plenty of disaster relief resources for you to inquire about, as well. The full list is provided here.
About Preferred Insurance
At Preferred Insurance, we provide comprehensive Business Owners’ Policies, complete with Property Insurance, Building Contents protection, Equipment Breakdown, Business Interruption and more. We understand that your business is your lifeline, and we aim to give you the peace of mind you deserve with the necessary insurance to help you recover from a natural disaster. For more information about our products, as well as the specialized policies we offer, contact us today at (888) 943-5144.