[StBernard] IRS provides relief for homeowners with corrosive drywall

[Westley Annis]

IRS Provides Relief for Homeowners with Corrosive Drywall 
  
IR-2010-102, Sept. 30, 2010

WASHINGTON - The Internal Revenue Service today issued guidance providing
relief to homeowners who have suffered property losses due to the effects of
certain imported drywall installed in homes between 2001 and 2009.

Revenue Procedure 2010-36 enables affected taxpayers to treat damages from
corrosive drywall as a casualty loss and provides a "safe harbor" formula
for determining the amount of the loss.

In numerous instances, homeowners with certain imported drywall have
reported blackening or corrosion of copper electrical wiring and copper
components of household appliances, as well as the presence of sulfur gas
odors. In November 2009, the Consumer Product Safety Commission (CPSC)
reported that an indoor air study of a sample of 51 homes found a strong
association between the problem drywall, levels of hydrogen sulfide in those
homes and corrosion of metals in those homes.

Revenue Procedure 2010-36 provides the following relief:

Individuals who pay to repair damage to their personal residences or
household appliances resulting from corrosive drywall may treat the amount
paid as a casualty loss in the year of payment.  
Taxpayers who have already filed their income tax return for the year of
payment generally have three years to file an amended return and claim the
deduction.The amount of a loss that may be claimed depends on whether the
taxpayer has a pending claim for reimbursement (or intends to pursue
reimbursement) of the loss through property insurance, litigation or
otherwise. 
In cases where a taxpayer does not have a pending claim for reimbursement,
the taxpayer may claim as a loss all unreimbursed amounts paid during the
taxable year to repair damage to the taxpayer's personal residence and
household appliances resulting from corrosive drywall.  
If a taxpayer does have a pending claim (or intends to pursue
reimbursement), a taxpayer may claim a loss for 75 percent of the
unreimbursed amount paid during the taxable year to repair damage to the
taxpayer's personal residence and household appliances that resulted from
corrosive drywall.  

A taxpayer who has been fully reimbursed before filing a return for the year
the loss was sustained may not claim a loss. A taxpayer who has a pending
claim for reimbursement (or intends to pursue reimbursement) may have income
or an additional deduction in subsequent taxable years depending on the
actual amount of reimbursement received.

For purposes of this revenue procedure, the term "corrosive drywall" means
drywall that is identified as problem drywall under the two step
identification method published by the CPSC and the Department of Housing
and Urban Development in their interim guidance dated January 28, 2010.

Further details and limitations can be found in Revenue Procedure 2010-36 on
IRS.gov.

 


Dan Johnson
Certified Public Accountant
832 E. Boston St. Unit 15
Boston Commons
Covington, LA  70433
Voice: 985-893-4123
Fax: 985-893-4124
Website:  www.danjohnsoncpa.com