Question

which of the following events would produce a deductible loss in 2022? a.erosion of personal use land due to rain or wind. b.termite infestation of a personal residence over a several year period. c.a misplaced diamond ring. d.damages to personal residence from hurricane in a federal disaster area.

Answer 1

The damages to personal residence from hurricane in a federal disaster area would produce a deductible loss in 2022.

What losses are deductible under business?

The deductible loss must have occurred within the tax year and not have been covered by insurance. If the taxpayer suffers a loss due to a casualty or theft of their personal, household, or living property, the loss must be the consequence of an identifiable, harmful, swift, unexpected, and unusual event.

The loss must be ancillary to the operation of the assessor's business and must result directly from, grow out of, or be related in some way to that activity. No restriction on its deductibility should be stated in the Income Tax Act's requirements.

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