Welcome Guest. Register Now!  

LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 08-19-2008, 01:59 AM
Junior Member
Join Date: Aug 2008
Posts: 1
Home Office Casualty Loss Conundrum

My question is about Casualty Loss related directly to the Business Use of my home. I own my home and the office is approximately 30% of the space. There was a flood that damaged part of my office. My insurance policy did not cover any of the loss and so reimbursement was zero. Many things needed to be replaced such as paneling, lighting, electrical, carpet, cabinets, etc. I wonder if it is correct to claim that the cost of restoring the office is the amount of the loss? Should I use the cost of the replacing the damage as the FMV before the loss and zero as the value after the loss, or should I use the remaining depreciable basis of the office as the FMV before the loss and subtract the cost of replacement from that value as the value directly after the flood to arrive at FMV after the loss. I have a long list of the replacement costs. These costs do not include costs that were repairs. which I have lsited separately. I had planned to expense both the replacement costs and the repairs as direct home office costs.

In addition, the current FMV of my house is probably 5 times the adjusted basis when I put the office into service. Over the past 10 years the property value of the house has appreciated. Also, the replacement costs were not for duplicate items that were damagaed, since many of those items are no longer available.

I also called the IRS and spoke to a 2 different agents each of whom told me different protocols to apply. The last one told me to fill out Form 4684, Part A. But that is for Personal Property, not Business Property. It seems to me Part B of Form 4684 is the correct place to take the casualty loss for business. Can I show the loss there or was the IRS agent correct? I was intending on carrying the loss from Part B Form 4684 to Form 8829, Column A, line 9 (Casualty Losses), as a direct expense, since the amount is determined by the cost of the replacements and applies only to the office portion of my house. I was also going to fill out a separate Form 4684 for the personal part of my residence that was damaged by the flood and use that on Schedule A.

What’s the best way to go about taking the business portion of my loss?

Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
C Corp and home office dilema brndwgnr C-Corporation 0 07-06-2008 03:47 PM
complex casualty loss deductions strategies cherywon Itemized Deductions 0 03-26-2008 03:41 PM
What are the rules regarding Home Office Deduction? TaxGuru Miscellaneous 0 03-14-2008 08:25 PM
Home Office Deduction Samatg General 0 03-15-2007 08:01 PM
Office at Home Expenses-What is deductible? BebopVT Sole-Proprietorship 0 01-19-2007 07:46 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 » Income
 » IRA/Sep
 » Medical
 » Payroll
Forum for CPAs
Financial Planning