2017 has been a difficult year for many Americans. With multiple hurricanes striking coastal areas and fires rampaging in California, there is significant loss and a heavy burden to recover from the storms.
When a natural disaster strikes, it can take everything or it can have a trickle effect, where potential customers leave an area or supplies cannot be shipped for your own business needs. A storm might literally rip your building apart, or its effects can make normal daily tasks insurmountable.
Tax relief and disaster relief
Insurance, repair, recovery and stress all take a toll in the aftermath of a storm. Whether you’re a business or an individual, there are tax options to help offset the damage as you recover. In this post, we’ll focus on business options.
When recovering from a natural disaster, the IRS offers various relief options to better report losses.
A few notable forms include:
- Postponement of deadlines
- Exclusion for disaster relief payments
- Casualty loss deductions
Casualty loss options
A recent Accounting Today report explores the subject of disasters and their impact on taxes, including casualty loss. Casualty loss refers to a sudden loss of income or value. When a fire or hurricane hits, there is significant damage that affects the entire market, affecting your property in many ways.
A disaster area faces reduced property value throughout, which is beyond the owner’s control and is independent of the condition of your property. Disasters cause real, physical loss in addition to decreased value on the market. A main building or equipment may be destroyed, or related property, such as landscaping and utilities.
Relief in recovery
If a business experiences a declared disaster, there are unique tax options available to offset those losses and to delay taxes owed. Through special deductions, postponements and exclusions a business will face less hardship during a challenging time. This allows businesses to focus on recovery as they readapt to daily life after a significant event that wreaked havoc on an entire community.