Insights and practical guidance in the wake of a natural disaster
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The recent devastation resulting from Hurricanes Florence and Michael underscores the importance of understanding how and when companies experiencing casualty losses can claim federal income tax deductions for those losses.
When a disaster hits, employers often want to help their affected employees. It is possible for employers to make certain payments, so that some or all of the employer provided assistance is non-taxable, but nonetheless deductible.
The IRS has granted “affected taxpayers” with respect to Hurricanes Florence and Michael an extension of time to perform certain actions. This article explains how taxpayers affected by the disaster may qualify for this rare extension of time.
For those taxpayers who realize a gain on an involuntary conversion, like a casualty, an election is available under section 1033 that allows those taxpayers to take some of the sting out of the gain by deferring its recognition.