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How Can I Deduct Disaster Losses From My Business Taxes?

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Question: How Can I Deduct Disaster Losses From My Business Taxes?
Answer:

Losses you incur as part of your business operation are deductible from your income for tax purposes. Losses as a result of disaster are included and considered as casualty losses. These losses may be deductible as business expenses. You cannot deduct losses which are covered by insurance.

Be sure to save records on the cost basis of any assets on which you incur a loss. Losses which are covered by insurance are not deductible. Here are some common losses you can deduct:

  • Auto Damage
    Uncovered damage to business vehicles caused by accidents, fire, theft, storm, heat, and other incidents.

    • Burglary/Theft Losses
      Uninsured losses to property and equipment from burglary, robbery, or theft
    • Employee theft or embezzlement
    • Casualty Losses
      Uninsured damage to your business property or equipment from bombardment, fire, storms (including hurricanes and tornadoes), drought, forest fires, ice damage or freezing of property, collapse of property, heat damage, wind or windstorm, and rain.
  • Business Interruption
    If you suffered a loss and consequently had to shut down or minimize your business operations, losses to income may be deductible if not covered by insurance.
  • Inventory Losses
    Loss in value of inventory due to damage or obsolescence
  • Forced Sale Losses
    If you were forced to sell one or more assets, or your entire business, at a loss, the loss may be deductible on your tax return.

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