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How to calculate the casualty and theft loss deduction for a C Corporation?

Similar to individual tax casualty and theft to a corporation may be deductible to a corporation. For C Corporations, the rules are based on whether the property was fully destroyed or partially destroyed:

If property is fully destroyed – If the property subject to casualty or theft has been deemed fully destroyed, the loss amount will become the adjusted basis of that property.

If the property is partially destroyed – If the property subject to casualty or theft has been deemed only partially destroyed, the loss amount will be restricted to the lesser of the reduction of that property’s fair market value or its adjusted basis prior to the loss.

For example, let’s assume that Aimes had property with an adjusted basis of $120,000 that was fully destroyed in a tornado. If Aimes received $60,000 of reimbursement from the insurance company, then Aimes would be able to deduct a $60,000 loss on their tax return.


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