# Possible Deduct for Lost Income Tied To Casualty Loss?



## Null (Oct 6, 2015)

I got rear-ended on Monday, which caused $5k in damage. My insurance is covering the loss minus $500 deductible (what I'll be claiming for the deduction, my car is leased, so I can claim the full value of the OOP repairs as a casualty loss since the contract states I am responsible for damages). The asshole ran after we pulled over and advised that we should get off the freeway by taking the exit and entering a nearby parking lot. Unfortunately I hadn't snapped a photo of his license plate; I was more concerned over not getting run over or hit again. I filed a police report promptly brought the car to the shop next day. 

Anyway, my car is in the shop for an estimated 2 weeks. In an effort I mitigate losses I checked out a couple options. Uber's vehicle rental is stupid expensive at $300/wk. Lyft's rental is more reasonable (Free with 60+ rides/wk), but no cars are available. I tried to use a friend's car, but their policy won't allow additional drivers with the TNC endorsement (also a driver). Basically, doesn't seem to be a good way to stay on the road. 

Now, I know if I got, or came across the other guy's info I can claim on his insurance for my lost wages. I don't believe I'm afforded such liberties when claiming on my own policy. I do have some potential work this weekend/next week for what I do in IT. The damaged asset is necessary for TNC, but not necessary for IT (I have a pickup truck and motorcycle that will work for this). 

So, can I deduct for the lost income? If so, by what basis would I compute the loss and how would I report it?


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## jester121 (Sep 6, 2016)

Deduct? Deduct from what, your taxes?

No.


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## Null (Oct 6, 2015)

jester121 said:


> Deduct? Deduct from what, your taxes?
> 
> No.


We're in the tax sub-forum, deduction from taxes is implied.

Do you know of statute, case law or have a personal anecdote that explains the basis of why it isn't deductible?


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## jester121 (Sep 6, 2016)

Null said:


> Do you know of statute, case law or have a personal anecdote that explains the basis of why it isn't deductible?


Yes -- because it's anecdotally dumb.

The US Tax Code is generally not going to outline a comprehensive list of billions of things are are not deductible. This is your hare-brained scheme, so it's up to you to locate the portion of the Code that *does* allow your deduction. Good luck with that.


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## Null (Oct 6, 2015)

jester121 said:


> Yes -- because it's anecdotally dumb.
> 
> The US Tax Code is generally not going to outline a comprehensive list of billions of things are are not deductible. This is your hare-brained scheme, so it's up to you to locate the portion of the Code that *does* allow your deduction. Good luck with that.


Is that you, John Wayne? Is this me?


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## expoolman (Oct 7, 2015)

If you choose the lease option to earn income you should be able to deduct that cost. That's how a real business keeps rolling.


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## Older Chauffeur (Oct 16, 2014)

I'm not a tax pro, but it seems to me that since you wouldn't owe tax on money you didn't make, why would you expect to claim an additional deduction for that same "lost" income? 
The collision deductible would come under casualty losses, I believe, but only the amount that exceeds the $500 less $100 less 10% of your adjusted gross income on Schedule A. For example, and assuming this was your only casualty loss, if your AGI was $4000 or more, the deductible amount for the loss would be zero.


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## Null (Oct 6, 2015)

Older Chauffeur said:


> I'm not a tax pro, but it seems to me that since you wouldn't owe tax on money you didn't make, why would you expect to claim an additional deduction for that same "lost" income?
> The collision deductible would come under casualty losses, I believe, but only the amount that exceeds the $500 less $100 less 10% of your adjusted gross income on Schedule A. For example, and assuming this was your only casualty loss, if your AGI was $4000 or more, the deductible amount for the loss would be zero.


The casualty loss rules for leased business assets are different. As long as damage to the asset I'm contractually obligated to cover, and I am, the "100/10" rule doesn't apply and I'm allowed to deduct 100% of the repair costs without having to distribute them over various tax years or account for depreciation.

My impression was the loss revenue wasn't going to be a thing, just wanted to be sure before I wrote it off... In my mind.


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## Older Chauffeur (Oct 16, 2014)

Null said:


> The casualty loss rules for leased business assets are different. As long as damage to the asset I'm contractually obligated to cover, and I am, the "100/10" rule doesn't apply and I'm allowed to deduct 100% of the repair costs without having to distribute them over various tax years or account for depreciation.
> 
> My impression was the loss revenue wasn't going to be a thing, just wanted to be sure before I wrote it off... In my mind.


Is the leased vehicle used solely for business? If there's any personal use the ratio of each type of use applies, just like you do when claiming actual operating costs. At least that's the way I read it. I guess it would help if the vehicle was leased in the name of the business. And in that case do you pay tax on imputed income for commuting and personal use of the vehicle? It seems like a real can of worms for a deduction of $500.
But as I said earlier, I'm not a tax pro. Maybe one of them will weigh in with an opinion.


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## Null (Oct 6, 2015)

Older Chauffeur said:


> Is the leased vehicle used solely for business? If there's any personal use the ratio of each type of use applies, just like you do when claiming actual operating costs. At least that's the way I read it. I guess it would help if the vehicle was leased in the name of the business. And in that case do you pay tax on imputed income for commuting and personal use of the vehicle? It seems like a real can of worms for a deduction of $500.
> But as I said earlier, I'm not a tax pro. Maybe one of them will weigh in with an opinion.


I think you're right on that. I log all my miles on this car, personal or business, so figuring out the percentage use is pretty easy; just need to generate a report EOY. What I meant was I get to deduct all of the $500 attributable to business, which is like 95%.


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## UberTaxPro (Oct 3, 2014)

Null said:


> I got rear-ended on Monday, which caused $5k in damage. My insurance is covering the loss minus $500 deductible (what I'll be claiming for the deduction, my car is leased, so I can claim the full value of the OOP repairs as a casualty loss since the contract states I am responsible for damages). The asshole ran after we pulled over and advised that we should get off the freeway by taking the exit and entering a nearby parking lot. Unfortunately I hadn't snapped a photo of his license plate; I was more concerned over not getting run over or hit again. I filed a police report promptly brought the car to the shop next day.
> 
> Anyway, my car is in the shop for an estimated 2 weeks. In an effort I mitigate losses I checked out a couple options. Uber's vehicle rental is stupid expensive at $300/wk. Lyft's rental is more reasonable (Free with 60+ rides/wk), but no cars are available. I tried to use a friend's car, but their policy won't allow additional drivers with the TNC endorsement (also a driver). Basically, doesn't seem to be a good way to stay on the road.
> 
> ...


"So, can I deduct for the lost income? If so, by what basis would I compute the loss and how would I report it?"

First I would pursue your insurance company for the lost income. Do you have uninsured motorist coverage there? If yes, it might fall under those provisions, and your insurance company would be liable for the lost income. I would exhaust that avenue first if it's even an option in your state.

Without a basis in this lost income I don't see any legitimate way to claim it as a business deduction. You need to think out of the box a little bit to establish a basis. If this was in my state I might file a small claims court case against "John Doe" for this lost income. If the adjudicator agrees that I'm owed this money by John Doe, the IRS should agree that I now have a basis in the lost income, and could be applied in some way shape or form to my tax return.


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## Null (Oct 6, 2015)

UberTaxPro said:


> "So, can I deduct for the lost income? If so, by what basis would I compute the loss and how would I report it?"
> 
> First I would pursue your insurance company for the lost income. Do you have uninsured motorist coverage there? If yes, it might fall under those provisions, and your insurance company would be liable for the lost income. I would exhaust that avenue first if it's even an option in your state.
> 
> Without a basis in this lost income I don't see any legitimate way to claim it as a business deduction. You need to think out of the box a little bit to establish a basis. If this was in my state I might file a small claims court case against "John Doe" for this lost income. If the adjudicator agrees that I'm owed this money by John Doe, the IRS should agree that I now have a basis in the lost income, and could be applied in some way shape or form to my tax return.


We have uninsured motorist property damage/bodily injury (I have both) as separate coverages to Collision. I called my insurance company already and they said that the lost revenues aren't covered by the policy. Such claims can be processed under liability coverages for the offending party, but he'd need to be ID'ed.


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## UberTaxPro (Oct 3, 2014)

Null said:


> We have uninsured motorist property damage/bodily injury (I have both) as separate coverages to Collision. I called my insurance company already and they said that the lost revenues aren't covered by the policy. Such claims can be processed under liability coverages for the offending party, but he'd need to be ID'ed.


Well he's probably correct but since he does work for the insurance company you might expect him to answer that way. There is a provision in the tax code that requires you to pursue all insurance options before taking deductions like these. I would just submit the lost income claim to them anyway, if they deny it you'll have proof that you pursued the insurance option 100%.


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