J.K. Lasser's Small Business Taxes 2022

CHAPTER 17Casualty and Theft Losses

1. Casualties and Thefts
2. Condemnations and Threats of Condemnation
3. Disaster Losses
4. Deducting Property Insurance and Other Casualty/Theft-Related Items
5. Disaster Assistance

Wildfires in the West, severe winter storms in the Midwest, tropical storms and hurricanes in the South, and Hurricane Ida in a dozen states—these are just some examples of the types of weather-related events that may have done severe damage to your business property in 2021. In addition, the Surfside building collapse in Florida is another example of a FEMA-designated disaster. Terrorist attacks and civil riots are other means of causing damage to business property as are accidents, such as oil spills. If you suffer casualty or theft losses to your business property, you can deduct the losses. You may also suffer a loss through condemnation or a sale under threat of condemnation. Again, the loss is deductible. Certain losses—those from events declared to be federal disasters—may even allow you to recover taxes you have already paid in an earlier year. But if you receive insurance proceeds or other property in return, you may have a gain rather than a loss. The law allows you to postpone reporting of the gain if certain steps are taken.

For further information about deducting casualty and theft losses, see IRS Publication 547, Casualties, Disasters, and Thefts (Business and Nonbusiness) and IRS Publication 2194B, Disaster Losses Kit for Businesses.

Casualties and ...