New client came in today. He has a rental house in Ocean Springs, MS that got flooded during the hurricane. He said he had a big picture window in the living room. As the tidal wave came toward his house there was a railroad tie that busted the window out, which he said probably saved walls,etc. The water came in and went back out, but was there long enough to do the water damage. Insurance doesn't cover flood. But the 3rd adjuster gave him $12,000 for a new roof. That is all he got from insurance.
FEMA set him up with Small Business Administration which is giving him a line of credit for $112,000 with low interest rate.
1. I use his cost plus improvements minus depreciation as his cost in house.Right? He wasn't sure how to find out the FMV before and after disaster. I suggested he call the insurance company. Any other suggestions?
2. Am I correct in my understanding that he can choose to take the loss on his 2004 or 2005 return? That would be great if we could go back and take the loss last year because he sold a farm in Iowa last year and had a $98,000 gain. So if he could reduce that gain by offseting it with the loss from Katrina, it would be great.
Thanks for your help.
Linda F
FEMA set him up with Small Business Administration which is giving him a line of credit for $112,000 with low interest rate.
1. I use his cost plus improvements minus depreciation as his cost in house.Right? He wasn't sure how to find out the FMV before and after disaster. I suggested he call the insurance company. Any other suggestions?
2. Am I correct in my understanding that he can choose to take the loss on his 2004 or 2005 return? That would be great if we could go back and take the loss last year because he sold a farm in Iowa last year and had a $98,000 gain. So if he could reduce that gain by offseting it with the loss from Katrina, it would be great.
Thanks for your help.
Linda F
Comment