How do I value the loss of my business as a result of a hurricane?

Business Deductions
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Tax Professional Answers

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David Neidhart
This can be a very complicated matter. However, the basic principle is that you can claim as a casualty loss the change in the fair market value of your company from the date before the loss to the date of the loss. You should calculate the loss you have experienced in capital assets and loss in income. Most business are valued using comparables and/or discounted cashflows. So, the question to be answered is to what extent has your future earnings been affected? Using that as a guide, you can calcuate the value of the business before and after the hurricane to determine your casualty loss.
Leave a Comment 327 weeks ago

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Patrick O'Hara , EA
The amount of the deductible casualty loss depends upon whether your suffered a total or partial loss.

Total loss of business property. If your business property is completely destroyed (becomes totally worthless), your deductible loss is the adjusted basis of the property (cost less depreciation taken), minus any salvage value and any insurance or other reimbursement you receive or expect.

Partial loss of business property. In a partial destruction, the deductible loss is the decrease in fair market value of the property or the adjusted basis of the property, which ever is less. Reduce this amount by any insurance or other reimbursement you receive or expect.

Find yourself an Enrolled Agent in your area that can assist you with the casualty loss reporting. It will be time well spent.
Leave a Comment 325 weeks ago

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