THE PROCESS OF
RECOVERY - INCOME AND PROPERTY TAXES
INTRODUCTION
The process of recovery after a
catastrophic loss involves a number “new” tasks and skills. You will need
assistance. The material in this blog is dedicated to assisting taxpayers
getting started with an emphasis on the tax compliance and reporting aspects.
The blog includes an eight part
discussion of many income tax issues that commonly apply to people who
experience a physical catastrophic event. The material is separated into 26
sections. Not all sections will apply to all taxpayers, but many will apply to
all those who have lost personal use real estate. Item 26 “BUSINESS AND INVESTMENT LOSSES” is a simple statement that “Many different provisions apply to
losses affecting business and investment properties that are not covered in
this material. The rules for replacement property are applied somewhat
differently than those for personal use real estate. The rules for disasters
discussed in section 25 above do not apply to business losses. There is unique
relief for businesses in disasters.”
Below is a “map” for the eight part:
PART 1
1
Tools for recovery
2
Income tax laws affect people who
experience a loss
3
Insurance vs. other support
4
Cost basis of property damaged
5
Documenting – a gain or a loss?
6
Tax reporting follows the
insurance proceeds
PART 2
7 No gain
or loss
8
A loss
P. of R., PART 3
9
A gain
10 Time
period to complete qualified replacements
11
Statute of limitations
12
Qualified replacement property1
3
Sale of residual land / or hold
for later sale
PART 4
14
Insurance vs. income tax
15
Things can get worse
16
Changes and “corrections”
17
Part personal use / part business –
irs rev. proc. 2005-14
PART 5
18
Affect of changing use after
replacement
19
ALE – Additional living expense
reimbursements
20
“Experts” –tax reporting
PART 6
21
Law suits, expenses incurred
22
Mortgage interest
23
IRS audits – good faith reporting
24
Property tax issues - california
FEDERAL
DISASTER DECLARATON AREAS:
25 Tax code provisions available for taxpayers in federal disaster areas
25 Tax code provisions available for taxpayers in federal disaster areas
26
Business and investment losses
disaster losses
2194 for
individuals and 2194b for businesses.
The booklets can be accessed on
the IRS website at www.irs.gov.
|
All rights to reproduce or quote
any part of the chapter in any other publication are reserved by the author.
Republication rights limited by the publisher of the book in which this chapter
appears also apply.
JOHN
TRAPANI
|
||
Certified
Public Accountant
|
||
2975
E. Hillcrest Drive #403
|
||
Thousand
Oaks, CA 91362
|
||
(805)
497-4411 E-mail John@TrapaniCPA.com
|
||
Website: www.TrapaniCPA.com
|
||
Blog:
www.AccountantForDisasteRrecovery.com
|
||
It All Adds Up For You
|
||
This material was contributed by John
Trapani. A Certified Public Accountant who has assisted taxpayers since 1976,
in analyzing and reporting transactions of the type covered in this material.
Internal Revenue Service Circular 230 Disclosure
This
is a general discussion of tax law. The application of the law to specific
facts may involve aspects that are not identical to the situations presented in
this material. Relying on this material does not qualify as tax advice for
purpose of mounting a defense of a tax position with the taxing authorities
The
analysis of the tax consequences of any event is based on tax laws in effect at
the time of the event.
This
material was completed on the date of the posting
© 2011, 2012 & 2013, John Trapani, CPA,
