What's new at JBMCPALLC?

Its our goal to update this page weekly to keep our visitors informed about us, and issues/timelines that affect our clients.. 
 

We have acquired the firm of AG Bruner & Associates

 
We look forward to continuing service to you for all of your accounting and tax needs.  Please contact us today so we can review your current situation and plan for your income taxes.
 

Information Released on Calculating Hurricane Rita Losses

03/04/06: As you may have heard, new IRS information provides an alternative method to calculate 2005 hurricane losses.  This information (released after 2005 return filings) can be found at our website www.swlacpa.com titled Revenue Procedure 2006-32

Click here for more information: http://www.irs.gov/newsroom/article/0,,id=159064,00.html

Many taxpayers and tax professionals utilized the insurance and/or contractorís methods to determine losses in calculating 2005 returns.   The Cost Indexes Safe Harbor Method rules are more favorable for determining losses, especially with those of partial damages and roof damages.  This method can only be used on personal residences, and not on rental property or other investment properties.  The additional claim will be limited to your basis of the damaged property and requires amending 2005 returns and possible 2006 returns if the claim exceeds 2005 taxable income.  You have 3 years to amend your returns to reflect this calculation.

An example would be where you sustained $3,500 of damage and received $2,500 insurance proceeds and paid the $1,000 deductible.  Your casualty loss claim would have been the $1,000 paid.  The new method accounts for a greater FMV loss than what the insurance paid to fix the damage.  The IRS will not challenge calculation amounts under this method.  I believe they will challenge the actual claim of damage occurred so be sure to retain your loss documentation.

Due to this additional complex work, we are completing 2006 tax returns first as they are due 4/15/07.  We will complete Cost Indexes Safe Harbor Method amendments starting 4/15/07. Please gather this information and bring to us as soon as possible.  The cost of the amendments will be based on the time and complexity of the return amendments.  If we did not prepare your prior yearsí tax returns, the cost could be higher.

Please find attached a guide to utilize in gathering the information need for this calculation.  Sketches of square footage calculations could be helpful as well as insurance adjustment papers.  Please contact us if you have any questions regarding the above.  Pass this along to anybody who may benefit from it.


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