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Disaster Loss Deduction for Colorado Business Owners

Now that the flood waters have receded and the immediacy of protecting life and property is behind us, the measurement and assessment of damage and losses from the flood is now taking place.

With the announcement two weeks ago that Larimer, Weld, Boulder and Adams counties are within a federally declared disaster area, special tax rules apply to the reporting and deductibility of losses related to business or income-producing property.  
 
Generally, a disaster loss is deducted on the tax return for the year the disaster occurred.  However, businesses located within a federally declared disaster area can choose to deduct their loss on their 2013 tax return, or file an amended tax return for 2012 and claim the loss as a deduction on the amended return as if the disaster had occurred in 2012.  This latter option will likely result in a refund of taxes; a refund that can be used right away to pay bills and underwrite repairs.

A disaster loss includes the damage or destruction of property and is the lesser of (1) the adjusted basis of your property, taking into account adjustments for improvements and depreciation, or (2) the decrease in the fair market value of your property as a result of the disaster.

That loss figure must then be reduced by insurance proceeds, subsidies, or any other reimbursement you receive or expect to receive. 

We are ready to assist you in determining these losses, analyzing their deductibility and in filing an amended return if you so choose.  As a way to assist all of our clients through the recovery process, all of these disaster-related services will be provided free of charge through the end of 2013.


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Loveland

(970) 667-1070
762 W Eisenhower Blvd
Loveland, Colorado 80537

Estes Park

1182 Graves Avenue
Unit C-1
Estes Park, Colorado 80517

Katy

(281) 665-7973
21398 Provincial Blvd
Katy, Texas 77450