| The IRS considers this loss as a "Casualty Loss." Generally speaking, these so called casualty losses are deductible to the extent that they are in excess of 10% of the taxpayers Adjusted Gross Income (AGI). This means that only the losses that exceed 10% of a taxpayers AGI deductible, and a $100 amount for each incidence.
But, the IRS has made an exception for victims of various disasters such as Hurricane Ike. Thus victims of Hurricane Ike will not have their losses limited by 10% of Adjusted Gross Income. In fact, the casualty losses sustained by your would be deductible from the first dollar, after deducting a $100 per-incident amount.
For example, you incurred a $45,000 loss and lets assume your AGI was $100,000, you would normally be able to deduct only $34,900 ($45,000 less $10,000 (10% of $100,000 AGI) less $100).
Under the rules for Hurricane Ike, you would be able to deduct $44,900($45,000 less $100). This is a difference of $10,000 in deductible expenses, which will save you $2,500 in taxes if you are in the 25% marginal tax bracket!
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