Disaster tax relief available to some, but not all, southern California wildfire victims
On January 2, 2018, President Trump issued a disaster declaration for the wildfires in Ventura and Santa Barbara counties, which means taxpayers will be eligible to claim disaster-related tax relief such as the casualty loss throwback on the federal return. This allows taxpayers to claim:
- A disaster loss on an amended 2016 tax year return under IRC §165(i);
- Exclusion of various disaster grants and loans under IRC §139;
- The federal three-year net operating loss carryback under IRC §172(b)(1)(E); and
- The expanded IRC §1033(h) involuntary conversion provisions.
The presidential disaster declaration does not include Los Angeles or San Diego counties, so wildfire victims in these counties are not eligible for this expanded relief on their federal returns.
However, because the Governor has declared states of emergencies for these areas, taxpayers will be able to claim the disaster loss throwback on their 2016 California return and will be able to exclude various disaster loss grants and loans under IRC §139.
For more information regarding tax relief for disaster victims, register for Spidell’s upcoming webinar on Disaster Losses.