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