DISASTER RECOVERY PROCESS - P of R Contents





THE PROCESS OF RECOVERY - INCOME AND PROPERTY TAXES
INTRODUCTION
The process of recovery after a catastrophic loss involves a number “new” tasks and skills. You will need assistance. The material in this blog is dedicated to assisting taxpayers getting started with an emphasis on the tax compliance and reporting aspects.

The blog includes an eight part discussion of many income tax issues that commonly apply to people who experience a physical catastrophic event. The material is separated into 26 sections. Not all sections will apply to all taxpayers, but many will apply to all those who have lost personal use real estate. Item 26 “BUSINESS AND INVESTMENT LOSSES is a simple statement that “Many different provisions apply to losses affecting business and investment properties that are not covered in this material. The rules for replacement property are applied somewhat differently than those for personal use real estate. The rules for disasters discussed in section 25 above do not apply to business losses. There is unique relief for businesses in disasters.”

Below is a “map” for the eight part:



PART 1 
1          Tools for recovery
2          Income tax laws affect people who experience a loss
3          Insurance vs. other support
4          Cost basis of property damaged
5          Documenting – a gain or a loss?
6          Tax reporting follows the insurance proceeds

PART 2
7          No gain or loss
8          A loss

P. of R., PART 3
9          A gain
10         Time period to complete qualified replacements
11         Statute of limitations
12         Qualified replacement property1
3          Sale of residual land / or hold for later sale




PART 4
14         Insurance vs. income tax
15         Things can get worse
16         Changes and “corrections”
17         Part personal use / part business – irs rev. proc. 2005-14

PART 5
18         Affect of changing use after replacement
19         ALE – Additional living expense reimbursements
20         “Experts” –tax reporting

PART 6
21         Law suits, expenses incurred
22         Mortgage interest
23         IRS audits – good faith reporting
24         Property tax issues - california

FEDERAL DISASTER DECLARATON AREAS:
25         Tax code provisions available for taxpayers in federal disaster areas
26         Business and investment losses disaster losses

The IRS has a number of useful booklets for taxpayers who experience a catastrophic physical event. The IRS has combined a number of these separate publications in two publications,

2194 for individuals and 2194b for businesses.
The booklets can be accessed on the IRS website at www.irs.gov.

All rights to reproduce or quote any part of the chapter in any other publication are reserved by the author. Republication rights limited by the publisher of the book in which this chapter appears also apply.


JOHN TRAPANI


Certified Public Accountant


2975 E. Hillcrest Drive #403


Thousand Oaks, CA 91362


(805) 497-4411       E-mail John@TrapaniCPA.com




Blog: www.AccountantForDisasteRrecovery.com


                                                                                                                      
                           It All Adds Up For You                     


  

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.  
Internal Revenue Service Circular 230 Disclosure
This is a general discussion of tax law. The application of the law to specific facts may involve aspects that are not identical to the situations presented in this material. Relying on this material does not qualify as tax advice for purpose of mounting a defense of a tax position with the taxing authorities
The analysis of the tax consequences of any event is based on tax laws in effect at the time of the event.
This material was completed on the date of the posting
© 2011, 2012 & 2013, John Trapani, CPA,