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Support the valuation with photographs, videos, canceled checks, receipts or other evidence.
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If items were purchased using a credit card or debit card, contact the credit card company or bank for past statements. Credit card companies and banks often provide user’s access to these statements online.
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If there are no photos or videos of the property, a simple method to help remember what items were lost is to sketch pictures of each room that was impacted: |
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Draw a floor plan showing where each piece of furniture was placed include drawers, dressers and shelves.
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Sketch pictures of the room looking toward any shelves or tables showing their contents. |
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These do not have to be professionally drawn, just functional.
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Take time to draw shelves with memorabilia on them.
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Be sure to include garages, attics, closets, basements and items on walls. |
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Business Records
To create a list of lost inventories, get copies of invoices from suppliers. Whenever possible, the invoices should date back at least one calendar year. |
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Check mobile phones or other cameras for pictures and videos taken of buildings, equipment and inventory.
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For information about income, get copies of bank statements. The deposits should closely reflect what the sales were for any given time period. |
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Get copies of last year’s federal, state and local tax returns. This includes sales tax reports, payroll tax returns and business licenses from the city or county. These will reflect gross sales for a given time period.
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If there are no photographs or videos available, sketch an outline of the inside and outside of the business location. Then start to fill in the details of the sketches. If the business was pre-existing, go back to the broker for a copy of the purchase agreement. This should detail what was acquired. If the building was newly constructed, contact the contractor or a planning commission for building plans.
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Casualty and Disaster Tax Losses
A casualty is the damage, destruction or loss of property resulting from an identifiable event that is sudden, unexpected or unusual. If damage is to personal, income‐producing or business property, you may be able to claim a casualty loss deduction on your tax return.
Generally, you must deduct a casualty loss in the year it occurred. However, if the property was damaged as a result of a federally-declared disaster, you can choose to deduct that loss on your return for the tax year immediately preceding the year in which the disaster happened. A federally- declared disaster is a disaster that took place in an area declared by the President to be eligible for federal assistance. You can amend a tax return by filing a Form 1040X, Amended U.S. Individual Income Tax Return. |
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Figuring Loss
You may need to reconstruct your records to prove a loss and the amount of the loss. To compute loss, determine the following figures: |
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The decrease in fair market value of the property that resulted from the casualty or disaster.
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The adjusted basis of the property this is generally what was paid for the property, increased or decreased, because of certain events. |
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You may deduct the smaller of these two amounts, minus insurance or other reimbursement. Additionally, certain deduction limits apply.
If the casualty loss deduction causes your deductions for the year to be more than your income for the year, there may be a net operating loss.
Fair market value (FMV) is generally the price for which the property could be sold to a willing buyer. The decrease in FMV used to figure the amount of a casualty loss is the difference between the property's fair market value immediately before and after the casualty. FMV is generally determined through a competent appraisal. Without a competent appraisal, the cost of cleaning up or making certain repairs is acceptable under certain conditions as evidence of the decrease in fair market value. |
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And remember our advise: work with a tax professional in any tax situation you may encounter. |