Many people have questions about how to deal with the losses they have suffered from Hurricane Matthew. I wanted to provide as much accurate information as possible before too many rumors get started. I have already heard quite a few good ones, that I only wish were true, but unfortunately are not. Here is how a Casualty loss should be calculated and when it may be deducted, and below is information on a South Carolina deduction that can mitigate the sting of the out of pocket costs to repair and replace damaged property.
First we are in an area determined by the President to warrant federal disaster assistance. Casualty losses from Hurricane Matthew will be considered disaster losses. A Disaster loss can be claimed on the return for the year in which it occurred, or on the preceding years return, by filing an amended return. This may help by getting a refund of taxes paid in the prior year, and assist with your personal recovery.
In very basic terms: The deduction from a casualty loss is the decrease in the Fair Market Value, (FMV), of the property immediately before the casualty and the FMV of the property immediately after the casualty, up to your basis in the property. The deduction will be reduced by the amount of insurance proceeds received, 10% of AGI, and $100. Calculating Fair Market Value may be an issue with different types of personal property, and there are different ways to arrive at a correct value. Casualty losses are deductible as an itemized deduction on your personal return.
Fair market value (FMV) is the price at which the property would be sold between a willing buyer and a willing seller, each having knowledge of the relevant facts.
"2015 South Carolina Code of Laws Title 12 - Taxation CHAPTER 6 - SOUTH CAROLINA INCOME TAX ACT Section 12-6-1620. "Catastrophe Savings Account" defined; exemptions allowed; contributable amount; attachment and garnishment.
Universal Citation: SC Code § 12-6-1620 (2015)
(A)(1) An individual taxpayer is allowed a deduction from the tax imposed pursuant to Section 12-6-510 for amounts contributed to a Catastrophe Savings Account in accordance with subsection (B)(3); and
(2) all interest income earned by the Catastrophe Savings Account is exempt from the tax imposed pursuant to Section 12-6-510 as provided in this article.
(B)(1) As used in this article, "Catastrophe Savings Account" means a regular savings account or money market account established by an insurance policyholder for residential property in this State to cover an insurance deductible under an insurance policy for the taxpayer's legal residence property that covers hurricane, rising floodwaters, or other catastrophic windstorm event damage or by an individual to cover self-insured losses for the taxpayer's legal residence from a hurricane, rising floodwaters, or other catastrophic windstorm event. The account must be labeled as a Catastrophe Savings Account in order to qualify as a Catastrophe Savings Account as defined in this article. A taxpayer shall establish only one Catastrophe Savings Account and shall specify that the purpose of the account is to cover the amount of insurance deductibles and other uninsured portions of risks of loss from hurricane, rising floodwater, or other catastrophic windstorm event.
(2) A Catastrophe Savings Account is not subject to attachment, levy, garnishment, or legal process in this State.
(3) The total amount that may be contributed to a Catastrophe Savings Account must not exceed:
(a) in the case of an individual whose qualified deductible is less than or equal to one thousand dollars, two thousand dollars;
(b) in the case of an individual whose qualified deductible is greater than one thousand dollars, the amount equal to the lesser of fifteen thousand dollars or twice the amount of the taxpayer's qualified deductible; or
(c) in the case of a self-insured individual who chooses not to obtain insurance on his legal residence, two hundred fifty thousand dollars, but shall not exceed the value of the individual taxpayer's legal residence.
(4) If a taxpayer contributes in excess of the limits provided in item (3), the taxpayer shall withdraw the amount of the excess contributions and include that amount in South Carolina income for purposes of Section 12-6-510 in the year of withdrawal."
The Department of Labor published Final Rules defining which white collar workers are protected by the Fair Labor Standards Act. The changes effect the overtime standards for white collar workers being compensated on a salaried basis. The minimum weekly salary has been increased to $913 per week. The record keeping required by employers has also been increased when a salaried white collar employee is not being compensated at the minimum weekly rate. We will consult with employers and employees to make sure they understand the full impact of the new rules.
The IRS’s cutbacks in taxpayer services could erode voluntary compliance with the tax laws and lower tax revenues, National Taxpayer Advocate Nina Olson has told Congress in her annual report. Olson also discussed tax-related identity theft, services to taxpayers living abroad, user fees, tax-exempt organizations, and identified the top 10 most litigated tax issues.
Important information for MyDORWAY users with Business Personal Property tax accounts.
Beginning August 15, 2016, Business Personal Property (BPP) returns will be filed on MyDORWAY. Letters will be mailed to the address we have on record before your BPP due date. The letter will contain important filing information, including your New File Number, which you will use to file one BPP return that will list all of your business locations.
Visit our website at https://dor.sc.gov/bpp-new for more information and our contact information.
SC Department of Revenue
Business Personal Property
PO Box 125
Columbia, SC 29214-0301
It’s the time of year when investors examine their portfolio and seek to harvest built-in tax losses. But short sellers who wish to harvest their losses should keep a close eye on the calendar.
“Investors looking to sell securities by year end should be aware of the trade date rules,” according to John Kaufmann, of counsel at Greenberg Traurig and a leading authority on the tax aspects of financial instruments.