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Virus Losses Should Be Treated As Casualty Losses, ABA Says

By Theresa Schliep · September 15, 2020, 6:27 PM EDT

Losses resulting from the novel coronavirus pandemic should be treated as casualty losses that are eligible for deductions in the same year they're incurred, the American Bar Association's Tax Section told the Internal Revenue Service.

The IRS should clarify that losses stemming from the pandemic can be treated as casualty losses entitled to a deduction under Internal Revenue Code Section 165(a) , the attorney group said in a letter dated Monday. The agency should also clarify that physical damage to property isn't required to claim such losses, which can be deducted in the same year that they're sustained, according to the letter.

The Tax Section requested other guidance on IRC Section 165(i) , which allows businesses to claim disaster losses in the tax year preceding the declaration of a federal disaster, the letter said. The IRS should clarify what it means for losses to be attributable to the pandemic and for how long disaster loss deductions can be claimed, the attorney group said.

--Editing by Neil Cohen.

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