Hurricane Katrina Damage

[susieq]

Taxpayer has a condo in Florida. Suffered damage from Katrina. It damaged the air conditioning, walls of condo,, parking structure and other areas. No insurance. Not all repairs have been completed. IN fact, parking structure is going to be replaced soon at the cost of $6,000 for her unit. Air was fixed in 2005. Misc amounts spent in 2006. Parking structure costs can be paid in three payments (probably not all paid until 2008. )

Should the 6,000 be paid in one year?

How about the deduction for these losses? Is the total that has to be paid or has been paid construed as the reduction in value for the 4684? What year do we deduct these losses?

Assume that the $100/10% of agi is waived. Still waiting for all docs and details of totl loss.

[susieq]

followup on Hurricane Katrina

I am very surprised that there were 28 views of my question and not one reply - is this a toughy>? I was not sure that is why I posed the questions. Hope to get something this time.

[WhiteOleander]

Have you read pg 4-21 in TTB regarding How To Calculate a Casualty and When To Deduct A Casualty?

You need to figure out the adjusted basis and FMV of the property when this occured. Then you can decide if you have a casualty loss.

[Bees Knees]

A casualty loss is not a deduction for the cost of repairs. A casualty loss is a deduction for the reduction in FMV of property after a casualty that is not reimbursed by insurance. You take the deduction for the reduction in FMV based on the rules mentioned on page 4-21 under the heading When to Deduct a Casualty or Theft Loss. For example, you can deduct a casualty loss even if you do not spend anything to repair the damage. Actual payment for repairs is not a requirement, unless insurance could have reimbursed you for the cost of repairs.

It is possible, however, to use the cost of repairs as a guide for determining the reduction in FMV, according to Letter Ruling 199903030.

[susieq]

Hurricane Guidance

Thank you for the responses. Do you belive that the 10% of AGI reduction of loss and the $100 per incident has been waived for Katrina, Wilma and Rita?

[gailtaxed]

Yes, I do think the $100 and 10% limitations were waved for the Katrina, Wilma and Rita disaster areas. You might want to look at Rev. Proc. 2006-32.
This is the link to it, but I am not sure it will post as a link:

http://www.irs.gov/pub/irs-drop/rp-06-32.pdf