There are various tax breaks available for victims of multiple hurricanes that occured in the Gulf Coast Area. Three different storms hit the area and the relief that is available depends on the region where one lives. The following are highlights for the GO Zone legislation passed in 2005.
-
Expensing for Small Businesses Increased. Certain
small businesses affected by Hurricane Katrina can annually deduct up
to $200,000 in qualifying property expenditures made in the disaster
area. This is double the amount otherwise allowed for small business
expensing. In addition, the phase-outs for level of investment
increased from $400,000 to $1 million, allowing more small businesses
to use this tax benefit. These provisions apply to property placed in
service in the Gulf Opportunity Zone (GO Zone) after August 27, 2005
and before January 1, 2008.
-
Special Bonus Depreciation to Help Businesses Rebuild.
Businesses of all sizes affected by Hurricane Katrina can take a
special first year depreciation deduction for qualified property placed
in service after August 27, 2005, and before January 1, 2008. The
special deduction is equal to 50 percent of the property's depreciable
basis.
-
Deduction for Demolition and Clean-up Costs.
Taxpayers may choose to take a deduction for 50 percent of any
qualified GO Zone clean-up costs that would otherwise be included in
the basis of property. The deduction is allowed for the tax year in
which the taxpayer paid or incurred the costs. Qualified GO Zone
clean-up costs means amounts paid or incurred after August 27, 2005,
and before January 1, 2008.
-
Net Operating Loss Carryback Extended. The
carryback period is extended from two to five years for net operating
losses attributable to Hurricane Katrina. This provision will allow
some businesses affected by the hurricane to obtain a refund of taxes
paid in earlier tax years. Special carryback rules are also provided
for certain timber losses and public utility casualty losses.
-
Work Opportunity Tax Credit for Hurricane Katrina Employees.
The Work Opportunity Tax Credit provides businesses with an incentive
to hire individuals from groups that have a particularly high
unemployment rate or other special employment needs. The credit is
expanded to include persons affected by Hurricane Katrina as a targeted
group of employees.
-
Income Exclusion and Employer Credit for Housing Employees In the Region Affected by Hurricane Katrina.
Up to $600 per month is excluded from an employee’s income for
employer-provided housing in the region affected by Hurricane Katrina.
Employers are also entitled to a significant tax credit for providing
such housing.
For more detailed information click
here.If you have questions about your tax situation
contact us.
