Insurance payments received for Sch C business for fire

[jhoh2000]

Hi everyone,

Schedule C Taxpayer had a fire at his business location in 2008. Under the insurance policy, the insurance company paid him $10,000 for business “property damanges” (desk, file, important documents) and $40,000 for business “loss of income” The TP received 1099 for “loss of income” only. My questions are:

1. Are they taxable?
2. Should I use Schedule A - 4684 for the property portion even though they are business properties?
3. What about “loss of income” portion for $40K? Is it a schedule C income (line 6) subject to SE Tax or Other Income (1040 line 21)

Your help is appreciated.

Thanks.

Jung Oh
Fairfax, VA

[erchess]

I would think

that the income replacement would go on Sch C and SE just like the income being replaced. I also believe that a business casualty loss does indeed end up on Sch A as you specified. Let's see what the really smart people think.

[ChEAr$]

It's all

that the income replacement would go on Sch C and SE just like the income being replaced. I also believe that a business casualty loss does indeed end up on Sch A as you specified. Let's see what the really smart people think.

schedule c income, the whole kit and kaboodle.

Since it's hard to separate the elements included in the 10,000 above (documents and equipment), I would just put the whole 50,000 as other income. Then treat loss of equipment as a zero sale on form 4797.

I say zero sale proceeds, unless that 10,000 was itemized so as to match up equipment
item for item; but it don't, I'm sure.