Taxes and Storm Damage: What Is Not Deductible Under Casualty Loss

2/11/2019 (Permalink)

Call your insurer in the Belton, MO area to find out more information and specifics

Taxes and Storm Damage

Tis the season, and most businesses are adding up deductions and getting ready to file. Unfortunately, while casualty losses may cover some elements of storm damage, not everything is tax deductible. In fact, there are at least four elements of damage that are typically not deductible.

1. Insured Items

Most businesses are required to have some type of commercial property insurance, and while basic policies will not cover extreme natural disasters, they likely cover wind and rainstorms. Any items or damage that are covered under your insurance policy cannot be claimed as a deduction because such issues are considered reimbursable.

2. Wear and Tear

Additionally, while you can deduct storm damage that is not reimbursable, you cannot claim items that have been damaged due to normal wear and tear. Therefore, if you have an HVAC unit that is past its prime and hasn’t been cared for properly, you cannot claim that it was damaged in a storm to receive a deduction.

3. Future Profits

While natural disasters, like hurricanes, can create significant business interruptions, you likely can’t claim profit losses. The reason is that these losses are considered future profits, and while some insurance policies will account for historical earnings, the IRS will not allow for these projections to be claimed as actual losses.

4. Project Restoration

Also, most insurance policies will cover some aspect of restoration after a storm, especially if you have additional riders, which means that restoration costs are reimbursable and not deductible. You can call your insurer, local IRS branch or a disaster restoration specialist in the Belton, MO, area to find out more information and specifics.

Storm Damage can wreak havoc on a business both physically and fiscally. Unfortunately, not all of this damage is deductible. However, through insurance policies, most losses are reimbursable, meaning that your financial difficulties are lessened in the long term if you have adequate coverage.