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Your first call should be to your commercial insurance carrier. They will also be able to give you direction. Call them immediately as I am sure they are overwhelmed with calls from other business owners who have lost everything.
Clear documentation is critical in these cases. So please take your time and be sure to accumulate both electronic records, such as PDF files, and physical documents in organized folders.
My team has been inundated with calls from around the country from business owners whose buildings, stores and offices have been destroyed by rioters. Those that had inventory of any kind had that inventory cleaned out by looters.
Property and inventory losses due to riots falls under Casualty Losses and you can take a deduction for these on your tax returns. Remember, that any insurance proceeds would be netted against your losses.
Rioting, civil commotion, and vandalism are usually covered perils under virtually all business owners and commercial insurance property policies ― both named perils and “all risk” policies. Damage to windows, doors, light fixtures and other items that are part of a building should be covered under the building property coverage included in the policy. Glass is usually part of covered property and built into base rates as long as it’s part of a building or structure (i.e., store windows and plate glass on office fronts)
Business owners should check with their insurer. Furniture, liquor, glassware office supplies, computers, machinery ― basically everything except for the building itself that was damaged or stolen should qualify for coverage under the business owner’s personal property coverage.
You also may have business interruption insurance.
This also applies to rental properties.
For income tax purposes, only losses to property are deductible as a casualty loss. You can’t deduct the loss of future earnings, nor can you deduct the loss of time you spent cleaning up after the riots.
For your reference, the IRS has a publication on this. #547 Click Here To View It.
For your reference, the IRS has a worksheet publication on this. 584-B Click Here To View It.
I know most of you going through this are devastated, but you need to take time to document all of the damage and all that was stolen from you.
Below are worksheets that you can use to start to account for your losses. You will eventually have to complete specific IRS forms, such as Form 4684. https://www.irs.gov/pub/irs-pdf/f4684.pdf
1 Pages from p584b
2 Pages from p584b-2
3 Pages 3 from p584b
4 Pages from p584b-2 5
5 Pages from p584b-3
6 Pages from p584b-4
My team is here to assist of course.
Questions? Concerns? Call me on (732) 673-0510.
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Please reach out to me without hesitation with any tax, business or accounting question, and to schedule a consultation.
Tax Laws are complex.
It is very easy to make mistakes that can incur penalties.
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Remember,
“If We Aren’t Working For You, Then You Aren’t Working At Your Best”
Chris Whalen, CPA
(732) 673-0510
81 Oak Hill Road
Red Bank, NJ 07701
www.chriswhalencpa.com
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