President Biden has signed the Federal Disaster Tax Relief Act (H.R. 5863; P.L. 118-148). As we previously reported, the bill:
- Retroactively excludes from gross income qualified wildfire relief payments paid to individuals as compensation (other than insurance payments) for losses, expenses, or damages for any wildfire declared a federal disaster after December 31, 2014 (§3, H.R. 5863);
- Treats disaster relief payments to victims of the East Palestine, Ohio, train derailment as excludable IRC §139(b) payments (§3, H.R. 5863); and
- Allows individual victims with a net disaster loss from any taxable year to claim an enhanced personal casualty loss under IRC §165(h) for certain federally declared disasters that occurred after February 24, 2021. (§2, H.R. 5863)
We anticipate that the IRS will issue additional guidance shortly, and we will keep you posted as updates become available.
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