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"I have a flood ins. claim with the NFIP for the contents coverage of my business. Will the received money be considered income and be taxed on federal income taxes?"

Forum|Forum|7 years ago
June 5, 2019
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"I have a flood claim with the NFIP for the contents coverage of my business that got flooded in Hurricane Harvey. Will the money that I receive from my flood insurance policy (which is underwritten by the NFIP) to repair/replace my office contents be considered income and will it be taxed on federal income taxes?"

Best answer by Opus 17

Possibly.

You have taxable income if the insurance payment is more than your adjusted cost basis in the destroyed property. Your cost basis is the price you paid minus any depreciation or expense deductions you have taken.

For example, if you have inventory or supplies that you already claimed a tax deduction for in a past year, or that you intend to claim a deduction for this year, and it is destroyed and reimbursed by insurance, the reimbursement is taxable. For assets, you have to determine the current adjusted cost basis based on depreciation.

https://www.wnj.com/Publications/How-to-Minimize-Taxable-Income-from-Casualty-

https://www.irs.gov/forms-pubs/about-publication-584b

O

Opus 17Answer

Employee

Possibly.

You have taxable income if the insurance payment is more than your adjusted cost basis in the destroyed property. Your cost basis is the price you paid minus any depreciation or expense deductions you have taken.

For example, if you have inventory or supplies that you already claimed a tax deduction for in a past year, or that you intend to claim a deduction for this year, and it is destroyed and reimbursed by insurance, the reimbursement is taxable. For assets, you have to determine the current adjusted cost basis based on depreciation.

https://www.wnj.com/Publications/How-to-Minimize-Taxable-Income-from-Casualty-

https://www.irs.gov/forms-pubs/about-publication-584b