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Tax
Implications - Introduction
After
a fire, you may have a deductible loss or a taxable
gain. The end result will depend on several factors,
which are discussed in this tutorial.
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| By
Duane Griffith, Extension Farm Management Specialist,
Montana State University |
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| The possible
remedies and alternative strategies an individual producer might
pursue in dealing with short term consequences are beyond the
scope of this tutorial. |
However, there
is one aspect to a wildfire that is standard for all producers.
Losses inflicted by fire are treated under the same tax rules for
all producers. The IRS refers to these as casualty
losses.
After a fire,
you may have a deductible loss or a taxable gain. The
end result will depend on several factors, which are discussed in
this article. The calculation of loss depends on whether the property
destroyed was farm or personal use property and whether the destruction
was complete or partial. First let’s cover the simple case
of farm property being completely destroyed by fire. To calculate
the loss (or gain) for complete destruction of farm property, use
the following procedure.
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