TP had damages to his businesses from one of this summer's hurricanes. Most of the businesses do not own the property/building but are leasing the property. Building damages are substantial and he is expected to do the repairs. He got a public adjuster to estimate the repairs and deal with the insurance company with respect to reimbursement for the losses.
Question: TP wants to take a casualty loss on his 2017 return for the difference between the expected insurance reimbursement and the estimated repair costs. Some repairs have been started but the only 'actual' loss is the estimate provided by the public adjuster. Is there a casualty loss?
I am thinking there is no casualty loss as he has no basis in the leased property-he just pays rent. Any repairs in excess of the insurance reimbursement should be capitalized as qualified leasehold improvements and depreciated accordingly.
TP would REALLY like to take these casualty losses in 2017 since the tax rate is higher than it will be with the new tax code in 2018
Thanks for any input!
Question: TP wants to take a casualty loss on his 2017 return for the difference between the expected insurance reimbursement and the estimated repair costs. Some repairs have been started but the only 'actual' loss is the estimate provided by the public adjuster. Is there a casualty loss?
I am thinking there is no casualty loss as he has no basis in the leased property-he just pays rent. Any repairs in excess of the insurance reimbursement should be capitalized as qualified leasehold improvements and depreciated accordingly.
TP would REALLY like to take these casualty losses in 2017 since the tax rate is higher than it will be with the new tax code in 2018
Thanks for any input!
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