Katrina Emergency Tax Relief Act of 2005

Deducting a personal casualty loss
The Greens lost their home in Biloxi, Miss. They normally would suffer a $10,000 casualty loss based on the insurance proceeds they receive. With KETRA, they are eligible to deduct the full $10,000 loss, not limited by either 10 percent of their AGI or the $100 "floor." The Greens may deduct the loss on either their 2005 tax return or an amended 2004 return. They should consider the tax bracket they will fall under for each year. Generally, deductions are more valuable for higher tax brackets.

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