Abstract
This Article describes the assortment of disaster relief and the federal income tax issues experienced by disaster victims.
As a framework for this analysis, the Article will illustrate the various tax issues for a hypothetical family named the Bells who lost everything in the 2003 Southern California wildfires. Part II describes the many types of disaster relief for individuals and households including grants and loans from government agencies, reimbursements from private insurance providers, assistance from charitable and other non-profit organizations and gifts from family, friends and strangers. Part III discusses the tax consequences of these relief payments and various other tax provisions that provide relief for unreimbursed losses and reinvested gains.
The tax provisions presented include the tax treatment of reimbursements for additional living expenses and lost income and disaster loans. In addition, the Article presents the tax relief available for gains realized as a result of the disaster and tax benefits for casualty and net operating losses. Next, the Article describes the tax consequences of interest expense resulting from disaster relief loans and from existing loans on property that has been damaged or destroyed by the disaster. Finally, the Article imparts several administrative provisions that assist disaster relief victims with tax filing and payment deadlines and the challenges of restoring current and historic tax records. Part IV provides a summary and conclusion for the Article.
Recommended Citation
Francine J. Lipman,
Anatomy of a Disaster Under the Internal Revenue Code,
6 Fla. Tax Rev.
(2005).
Available at: https://scholarship.law.ufl.edu/ftr/vol6/iss1/14