| Hurricane Katrina has left a wide and | | | | With the federal governments delay in |
| long path of destruction. Besides the | | | | rescue operations, your business may |
| human toll, businesses on the Gulf Coast | | | | have suffered losses related to theft. |
| have taken a beating. If yours is one, | | | | New Orleans, in particular, seems to |
| here is how you can write off casualty | | | | have suffered an outbreak of theft |
| losses on your taxes. | | | | problems. While I can understand a |
| Casualty Losses - Katrina | | | | person taking water and food, I must |
| If your business suffered losses because | | | | admit I have little empathy for people |
| of Hurricane Katrina, you can at least | | | | stealing television sets. For business |
| write-off much of the loss. In doing so, | | | | owners, the distinction is irrelevant. |
| you may be able to get a refund of taxes | | | | To claim a theft loss for your business, |
| paid earlier in the year. | | | | you must show: |
| Tax law allows businesses to write-off | | | | 1. When the property went missing, |
| business property that is damaged or | | | | 2. A theft took place pursuant to your |
| destroyed because of a storm. To claim | | | | state law, and |
| the deduction, you must show the | | | | 3. You were the owner of the property. |
| following: | | | | The inevitable question that will arise |
| 1. A specific casualty occurred and when | | | | for business owners is, "How do I know |
| it occurred, | | | | what was stolen versus destroyed?" |
| 2. The casualty was the direct cause of | | | | Technicalities aside, you should claim |
| Katrina, and | | | | losses as casualties unless you have |
| 3. You are the owner of the property. | | | | specific proof and a police report |
| In the case of Katrina, this shouldn't | | | | related to a theft. I seriously doubt |
| be difficult to do. Take pictures of | | | | the IRS is going to give you much |
| anything that is a loss and try to | | | | trouble. If it does, a judge will laugh |
| compile a list of everything destroyed | | | | the IRS out of the courtroom. |
| or damaged. Obviously, this should occur | | | | Insurance Proceeds |
| after taking care of your personal | | | | If you receive insurance proceeds for |
| situation. | | | | your casualty losses, you must apply the |
| Importantly, business owners should make | | | | proceeds amount to the loss you are |
| sure they claim everything damaged. With | | | | claiming. Sorry, but not double dipping |
| the horrific flooding, damaged property | | | | is allowed. |
| may include not only products but also | | | | In Closing |
| anything that rusts. If your business | | | | First and foremost, get your family and |
| location is under water, make sure you | | | | personal situation in order. Your |
| investigate the impact on the property | | | | business can wait and you will have |
| itself. | | | | options once you get to it. |
| Theft Losses - Katrina | | | | |