Due to the severe weather conditions caused by El Niño, many businesses suffered costly property and casualty losses in recent months. At press time, the number of federally declared disasters in 1998 had already reached 41--compared to 45 for all of 1997. This year is shaping up to be a serious one for disasters, says the Federal Emergency Management Agency's Marc Wolfson.
The government tracks the impact of disaster losses on businesses by the number of disaster loans it makes to business owners. In the first nine months of this fiscal year, the SBA's disaster assistance program approved more than 4,000 business loans, totaling almost $224 million.
If your business was unlucky enough to suffer a loss from a natural disaster, especially in a federally declared disaster area, take heart: You're probably eligible for some tax relief. If the president declares a specific location a federal disaster area, business owners can receive federal assistance, such as low-cost disaster loans and special tax benefits. While the deductions won't replace what a natural disaster or other mishap has taken away, the tax benefits may make your disaster-related problems a bit easier to endure.
Even if your business hasn't yet experienced a disaster, it's important to know what you're entitled to in case you're not so lucky next time around.
Joan Szabo is a writer in Great Falls, Virginia, who has reported on tax issues for more than 12 years.