barn fire livestock total loss

[vazquezklan]

We had a barn fire that destroyed our barn, home and total livestock loss. How do I show the livestock as a loss on tax return. It happened in 2021. I was told casualty loss does not apply due to not federal disaster.

[Mike9241 · Accepted solution]

were the livestock and therefore the barn used in a business you had?  if not,  sorry no deduction. if yes, then you figure your casualty loss to business property by completing Section B of Form 4684, Casualties and Thefts. Turbotax will carry the loss to Form 4797, Sales of Business Property. a federal disaster declaration is not necessary for a business casualty loss.

the same would apply to your home but only to the business portion.

[Critter-3]

If you have the livestock listed as assets then you would sell off the assets for zero dollars (or whatever you got from the insurance company for the livestock if)  and that would automatically let you claim the rest of the depreciable basis left on the books. Otherwise you have no loss to deduct because you have no cost basis to recapture.

[vazquezklan]

Yes it was a meat goat raising business. the barn fire that destroyed the barn completely and killed our meat goats that were being housed inside due to winter. I have been using the accrual inventory method. So do I just show the ending inventory as zero? We were a seed stock operation using the farm unit value for inventory. Not sure if I can claim them as casualty loss or is removing them from inventory the only step I can take tax wise.

thank you and sorry I reposted in error. Any idea how to delete the duplicate post? I am new to this community board.

[Critter-3]

If you have them listed as inventory then your end of year inventory figure will automatically capture the loss of livestock...that is how you capture that cost.  If the insurance company pays you anything for the goats then it is simply reported as income. 

[Carl]

All you do is show your End-of-Year Inventory balance as $0. That's basically it for inventory. Since the lost stock was not sold, you'll have no income to report for that lost stock, since you didn't sell them. However (Yes, there's always a "but")

If you received an insurance payout for that lost inventory, then you effectively sold that inventory to the insurance company. So the payout would be reported as income to the business.

[vazquezklan]

If the beginning inventory of livestock is say 30,000 and the ending is zero due to all lost to fire. that gives me a negative for cost of sales how do I handle that if there were only a few hundred dollars in sales.  will the software know what to do? thanks.

[Critter-3 · Accepted solution]

This is just what happens ... you will incur a loss on the Sch F.  This in turn may produce an NOL on the form 1040.  Follow the interview screens in order ... do not skip about.