Monday, September 22, 2014



On September 11, 2014, the President declared the August 24, 2014, Napa Valley Earthquake a federal disaster (FEMA number DR 4193). The declaration did not include any financial assistance, at this time, being made available to individuals or businesses. However, the mere declaration of the incident as a Federal Disaster opens up the federal Income Tax Code provisions applicable to disasters to individuals and busineees.

Internal Revenue Code section 165(h)(3) “SPECIAL RULE FOR LOSSES IN FEDERALLY DECLARED DISASTERSstate in subparagraphs (C)(i) and (C)(ii), the definitions or a “FEDERALLY DECLARED DISASTER for purposes of the availability of the special sections of the Internal Revenue Code  to taxpayers who experience a  major disaster and defines a “DISASTER AREAfor purposes of applying the special benefits of the Tax Code applicable to declared federal disasters:

165(h)(3)(C)(i) FEDERALLY DECLARED DISASTER.— The term "federally declared disaster" means any disaster subsequently determined by the President of the United States to warrant assistance by the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.
165(h)(3)(C)(ii) DISASTER AREA.— The term "disaster area" means the area so determined to warrant such assistance.

Once the President makes the “Declaration” the Internal Revenue Code’s special sections become available to taxpayers.


One of the considerations that taxpayers who have not yet filed their 2013 income tax returns should consider before the October 15th extension due date is the possibility of claiming a loss on their 2013 tax return as permitted in these circumstances. Taxpayer who file their returns on an annual basis have until April 15, 2015 to make a final decision regarding claiming the loss on their 2013 tax return, but they may want to claim the benefits now.

Claiming a disaster (casualty) loss deduction is not a decision that should not be taken lightly. Claiming a disaster (casualty) loss tax deduction should be claimed only once all the facts are tied down.

There are a number of entries on this blog that should be consulted to understand the process and implications of claiming a deduction. A knowledgeable tax professional should be contacted to discuss the details of your circumstances. Many facts will be important to understand before a decision can be made.

JOHN TRAPANI assists both taxpayers directly and advises taxpayers’ tax professionals.
This material was contributed by John Trapani. A Certified Public Accountant who has assisted taxpayers since 1976, in analyzing and reporting transactions of the type covered in this material.

© 2014, John Trapani, CPA,
All rights to reproduce or quote any part of the chapter in any other publication are reserved by the author.


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Tax Advice Disclaimer
Any implication of accounting, business or tax advice contained in this material is not intended as a thorough, in-depth analysis related to your specific issues. It is not a substitute for a formal opinion including a discussion or your specific situation. It is not sufficient to avoid tax-related penalties. If desired, John Trapani, CPA would be pleased to perform the requisite research, specific to your facts and circumstances and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.
This material was completed on the date of the posting

 Below is the FEMA Disaster Declaration:

President Declares Disaster for California
Release date: September 11, 2014
Release Number: HQ-14-075
WASHINGTON, D.C. – The U.S. Department of Homeland Security's Federal Emergency Management Agency announced that federal disaster aid has been made available to the State of California to supplement state, tribal, and local recovery efforts in the area affected by an earthquake during the period of August 24 to September 7, 2014.
The President's action makes federal funding available to state and eligible tribal and local governments and certain private nonprofit organizations on a cost-sharing basis for emergency work and the repair or replacement of facilities damaged by the earthquake in Napa and Solano counties.
Federal funding is also available on a cost-sharing basis for hazard mitigation measures for all counties and tribes within the state.
Stephen M. De Blasio Sr. has been named as the Federal Coordinating Officer for federal recovery operations in the affected area. De Blasio said additional designations may be made at a later date if requested by the state and warranted by the results of further damage assessments.
Follow FEMA online at,,, and  Also, follow Administrator Craig Fugate's activities at
The social media links provided are for reference only. FEMA does not endorse any non-government websites, companies or applications. 
FEMA's mission is to support our citizens and first responders to ensure that as a nation we work together to build, sustain, and improve our capability to prepare for, protect against, respond to, recover from, and mitigate all hazards.
Last Updated: 
September 12, 2014 - 07:29

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