Individual Income Taxes - Tax-Deductible Losses Research Paper

Individual Income Taxes - Tax-Deductible Losses - Research Paper ExampleCasualty sack is not deductible if the damage or destruction is caused by accidental breaking like glasswargon, fire that was set willingly and finally a motorcar accident is neglected or willingly act caused it. Keeping adequate records is one of the most important things a taxpayer can avoid a authority IRS audit doesnt result in any assessment of additional tax, penalties and interests. This method helps you defend yourself against IRS audit.According to the United States internal revenue code, there atomic number 18 certain losses that are considered for tax purposes. This means that the loss cant be compensated by Insurance and it must be preserve during the taxable year. If the losses are casualty or theft 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 activity are deductible whether if not they are due to casualty or theft (Pratt & Kulsurd, 2012). Under the on-going 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 equipped 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 eighties deductions were allowed for losses related to fire and shipwrecks. In the 1990s it covered natural disasters and other 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 save 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 return for the casualty loss related to disaster.