Hurricane repair

[DTS]

I have a client who owns rental property in Louisiana. He spent $4,700 in repair due to damage from the hurricanes.

Will this have to be added to the basis or are there special rules this year that will allow him to write-off currently? Pub 4492 does not address this, as I see it and I thought someone had run across this situation this year.

Thanks, Dennis

[Bees Knees]

Business casualty losses are not subject to the 10% AGI limit or the $100 per casualty rule that applies to individuals. So 100% of the business casualty is deductible. This rule applies regardless of whether it was located in one of the hurricane zones or not.

TTB, page 4-21 under business casualty loss-double deduction says: "The cost or repairs may indicate the reduction in FMV for purposes of deducting a business casualty loss if the repairs only restore the property to its condition prior to the casualty. The same cost of repairs is also deductible as repairs. (TAM 199903030) Example: Barry owns rental property damaged in a flood. His insurance does not cover flood damage. Barry spends $10,000 restoring the property to its pre-flood condition without materially improving the value of the property. Barry takes a $10,000 casualty loss deduction plus a $10,000 repair deduction on his Schedule E. The $20,000 in total deductions are allowed even though his out of pocket expenses are only $10,000. Barry must reduce the basis in his rental property by the $10,000 casualty loss deduction."