Business Use Property and Hurricane Sandy

Taxpayers who have suffered losses related to their business property or income-producing property are also allowed to deduct these losses on their tax return.  These losses are not subject to the same deduction limits as personal property (such as the 10% AGI rule and $100 rule), and can either be reported as an itemized deduction on their Schedule A if income producing property or as a direct loss on the first page of the 1040 return for business property.

When calculating the amount of the loss, the taxpayer should take the lesser of the following:

1) adjusted basis, or

2) decline in FMV.

If the property is totally destroyed, then the taxpayer must just take the adjusted basis of the property.


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