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Casualty losses for trees: An uphill climb

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in Small Business Tax

Q. Our personal property is professionally landscaped. We’ve lost a number of trees this summer due to insects. Can we claim a casualty loss for the replacement value? J.B.L., Clinton, N.J.

A. It depends. You can deduct for casualty losses that are caused by a “sudden, unexpected or unusual” event. In most cases, the IRS will rule that you can’t deduct for damage to trees and shrubbery under the casualty-loss rules. That includes tree loss due to Dutch elm disease, which is progressive, and destruction caused by fungus, insects, worms or similar pests. But if you can prove that the damage resulted from an unexpected or unusual infestation of beetles or other insects, you might qualify for a deduction. Tip: Casualty losses to personal (nonbusiness) assets are deductible only to the extent that your total losses for the year exceed 10 percent of your adjusted gross income (after subtracting $100 per casualty).

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