Some disaster victims may now throw back losses

Taxpayers who suffered a loss as a result of the wildfires that began on June 20, 2008 — and continuing — in these 11 counties now qualify to elect to throw any losses back to the 2007 taxable year: Butte, Kern, Mariposa, Mendocino, Monterey, Plumas, Santa Barbara, Santa Clara, Santa Cruz, Shasta and Trinity. 

The June 28, 2008, presidential declaration allows taxpayers who suffered losses in the above-mentioned counties to make an IRC §165(i) throwback election, claiming any disaster loss in the year preceding the year in which the disaster occurred for both federal and California purposes.¹

Taxpayers may make the election by filing a return, an amended return, or a claim for refund clearly showing the election; and may make separate state and federal elections.

California conforms to the federal law that requires the “throwback” election to be made by the later of:

• The due date (without extensions) of the return for the taxable year in which the disaster occurred (April 15, 2009, for calendar-year taxpayers, for example); or
• The due date (with extensions) of the return for the taxable year preceding the year in which the disaster occurred (October 15, 2008, for calendar-year taxpayers, for example).²

Taxpayers who suffered a loss may not take a 100% disaster loss carryover unless there is enabling state legislation. 

For a free special report on disaster losses, send an e-mail with your name and e-mail address to Guestbook@spidell.com.

¹ IRC §165(i); R&TC §§17207, 24347.5
² Treas. Regs. §1.165-11(e)