Tax Deduction for Trees Lost in Storms
From The Shade Tree Digest
Were any of your fine shade trees wrecked by the September snowstorm? If so, a bit of foresight and effort on your part now may result in considerable savings to you when the time comes to pay your 1959 Federal income tax. For, usually, residential property is more valuable with trees than without, and if the value of that property is lessened as a result of storms the amount of the tangible loss is deductible in computing income tax returns.
Any loss claimed must be based upon material value. A tree may become “almost like a member of the family” in your esteem—but don’t use that approach if you have occasion to evaluate it as “deductible loss!” However much Government tax officials might agree with you in sentiment, they are permitted to measure the worth of a tree only by its effect upon the market price of the “real estate”—including land, buildings and other trees—of which it is an integral part.
Relative to computing the amount of deductible loss, the Bureau of Internal Revenue advises as follows: (1) The “apparent loss” of property is the difference between the fair market values of the property immediately before and immediately after the casualty. (2) Compare the “apparent loss” with the adjusted basis of the property. (3) The “loss sustained” is the apparent loss, or the adjusted basis, whichever is the lesser. (4) From the loss sustained subtract the amount, if any, of insurance or other recovery. (5) The balance remaining is the “loss recognized” for income tax purposes.
Thus, computing the amount of the “loss” hinges upon determination of “fair market values,” and, unfortunately, there is no exact mathematical formula by which this can be ascertained. Clearly, any “loss” claims should be supported by positive evidence. Such evidence might include photographs, and certainly reports from experts in the particular fields involved in the loss.
Shade trees certainly add to the value of a property. If one is destroyed by a storm, measuring the extent of loss to the property is a matter requiring technical knowledge and good judgment. The value of a tree is affected by species, age, condition, location and other factors, and to arrive at an estimate which will survive close scrutiny by tax officials all pertinent factors must be considered. Data intended for use in support of a loss claim should be gathered, of course, as soon as possible after the casualty.
Further tree damage can be expected from ice storms in the months ahead. If any of your trees have been, or are, lost from such “natural physical forces” it will pay you to remember that their value—at least, for tax purposes—can be measured in dollars-and-cents.
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