Casualty Losses

Large assets that are lost due to a storm may generate unreimbursed losses that exceed income in the year that the loss is being claimed. Regardless of whether the casualty loss relates to business, income-producing activity or personal-use assets, the loss can generate a Net Operating Loss (NOL), which can be carried to other tax years either backwards or forwards. The tax code provides that losses that meet the casualty requirements are not considered passive activity losses and are fully allowable.