Individual Income Taxes - Tax-Deductible Losses Research Paper

Individual Income Taxes - Tax-Deductible Losses - Research Paper causeCasualty loss is non deductible if the damage or destruction is caused by accidental interruption like glassw atomic number 18, fire that was set willingly and finally a car accident is neglected or willingly act caused it. Keeping adequate records is one of the most important things a levypayer can fend off a potential IRS audit doesnt result in any assessment of additional tax, penalties and interests. This manner jocks you defend yourself against IRS audit.According to the United States internal revenue code, there are certain losses that are considered for tax purposes. This means that the loss cant be compensated by Insurance and it must(prenominal)(prenominal) be sustained during the taxable year. If the losses are casualty or stealing of personal, family, the loss must result from an event that is identifiable, and damaging or unusual nature. Losses incurred in a business or a profit-seeking activi ty are deductible whether if not they are due to casualty or theft (Pratt & Kulsurd, 2012). Under the current tax laws a casualty loss deduction is allowed if the extent of the loss is not reimbursed by insurance. This law was enacted because of the natural causes that frequently happen and the insurance companies are not fully equipt and able to pay for the massive damages caused. The tax-deductible losses have been modified for years, allowing losses under the tax code. In the 1880s deductions were allowed for losses related to fire and shipwrecks. In the 1990s it covered natural disasters and early(a) casualties and theft. The federal government has responded in so much losses by offering aid to help cover by removing debris and rebuilding areas hit hardestSome people are covered by insurance but the insurance doesnt cover the entire loss fully, if a tax payer doesnt have insurance, he/she can be compensate by the federal income tax outlet for the casualty loss related to disas ter.