Rev. Proc Information

Transkript

1 Rev. Proc Information 2006, CPAs 1

2 Table 1-Total loss of the home Table 2- Near total loss is water to the roofline. Completely gut the home from floor to rafters - wiring, plumbing, electrical systems are gone. The home is gutted and must be rebuilt. 2006, CPAs Table 3-Interior flooding is what is generally considered a normal flood. Cut the sheetrock out; take out some wiring and flooring; but not a total renovation. 2006, CPAs 2

3 Table 4-Wind and rain damage, where a room must be totally renovated due to the destruction of the roof, wall, and flooring. This is extreme damage to only part of the home for example a tree falling onto the roof. At least 15% of the square footage of the home must be affected to use this table. 2006, CPAs Table 5-Roof damage. Even if only partial damage occurred, if the total roof had to be replaced, the loss could be taken on the full square footage of the roof Table 6-Detached structures refer to unfinished buildings, such as a garage, pool house or carport, with no electrical or plumbing 2006, CPAs 3

4 Table 7-Wood Decking must be a permanent structure, but does not need to be attached to the home Pools are not included in the revenue proc. tables, so you may add the cost to fix a pool to your casualty loss Landscaping damage is already included the rev. proc. and cannot be added to your casualty loss. There is a 6% factor included in the table. 2006, CPAs Docks are not included in the rev. proc. and damage may be added to the table amount Non-typical assets, such as an indoor elevator, are not included in the rev. proc., and can be added to the table amount using the cost to repair method. (If the repair has not been done at the time of filing the return, you can disclose that the repair will be done in the future.) 2006, CPAs 4

5 Combining Tables A two story home was flooded completely on the first floor, some flooding on the second floor, and substantial damage to a room on the second floor as well Table 2 on the first floor, Table 3 on most of the second floor, and Table 4 on the specific second floor room with the substantial damage. If the roof had been damaged as well, Table 5 could have been added. Therefore Tables 2, 3, 4, and 5 could have all been used in this instance. 2006, CPAs You may also use Table 2 or 3 on the first floor due to flooding, and the actual cost to cure on the second floor since the damages were due to two distinctly different types of damage (flood and wind damage) Therefore safe-harbor and cost to cure can be combined in some limited cases 2006, CPAs 5

6 Q and A Q. Would insurance proceeds be allocated between floors? A. No. Insurance would pay separately for flood and wind. The total casualty loss of the residential property would be offset by the total insurance from both flood and wind. 2006, CPAs Q. Can you use safe harbor tables for first floor and cost to cure for second floor? A. You can use actual cost to repair for the second floor while still using the rev proc for the first floor. 2006, CPAs 6

7 Q. Is safe harbor applicable only to whole residence and methods cannot be split between floors? A. Methods can be split between floors as long as they are two distinct types of damage that meets the definition of the tables. 2006, CPAs 7