Casualty, Theft & Financial Loss Lawyer
It is tough to view casualty, theft, and financial losses in a positive light, so you might be relieved to know that IRS rules may provide advantageous tax treatment under certain circumstances. Generally speaking, these losses can serve as itemized deductions to reduce your income tax liability. You might even implement strategies that result in a net loss when your deductions exceed income.
However, it is essential to work with experienced legal counsel who can help you take advantage of rules on casualty, theft and other financial losses. You may encounter challenges in dealing with the IRS regarding a rightful deduction. Our attorneys at Lehman Tax Law can assist in getting favorable tax treatment when available, so please our office today. A casualty, theft & financial loss lawyer can advise you, but you might also find it useful to review some of the basics.
Overview of Losses Under US Tax Laws
They key definitions under IRS rules include:
- Casualty Losses: If your interests are hit by a sudden, unforeseeable, or extraordinary event, you may experience casualty losses. A common example is a natural disaster, such as a hurricane, fire, flooding, and others. When the property is business-related and completely destroyed, the loss is equal to your adjusted basis. Personal property that sustains partial damage is calculated as the lesser of your adjusted basis OR the fair market value after the damage.
- Theft Losses: When you sustain losses due to theft, your loss amount for purposes of deductions is the adjusted basis in the property. To qualify for the deduction, the perpetrator must have engaged in theft as defined by state law, which usually involves misappropriation of the item with the intent to deprive you of it.
- Disaster and Emergency Losses: The most crucial factor with claiming this deduction is whether the president has issued an official declaration regarding a disaster area or emergency. This category includes casualty and theft losses to your home, its contents, and vehicles caused by the disaster.
Notable Factors Regarding Casualty, Theft, and Financial Loss
If you file an insurance claim for reimbursement of your losses, you cannot apply the deduction for tax purposes. The exception is where you reduce your losses by the amount you receive through your insurance coverage. When the asset retains any salvage value, you must account for this amount in claiming your deduction. In addition, keep in mind that:
- Your adjusted basis in a property subject to casualty, theft, and/or financial loss is calculated as: The cost of acquiring the property, plus improvements, minus depreciation.
- You claim a loss as a deduction in the year that you sustain it, so the amount can offset capital gains.
Reach Out to a Casualty, Theft, and Financial Loss Lawyer for More Information
To learn more about using IRS rules to your advantage after casualty, theft, or other financial losses, please contact Lehman Tax Law. You can call our office at 561-368-1113 or via our website to schedule a free case evaluation with attorney Richard S. Lehman. Once we review your circumstances, we can advise you on strategies to implement dedications and obtain favorable tax treatment.