Accepted Answer

Hello ggdad,

If your property is not completely destroyed, the amount of your casualty or theft loss is the lesser of the adjusted basis of your property, or the decrease in fair market value of your property as a result of the casualty or theft. Since your loss was not an entire loss of your property, you would not put a value on the trees themselves, but instead would determine the decrease in fair market value of your property as a result of losing these trees.

The IRS addresses the issue of the loss of trees and other landscaping as a result of a casualty as follows:

"In determining the amount of a casualty loss from damage to personal-use residential property, trees and other landscaping are considered part of the entire residential property, and are not valued separately or assigned a separate basis, even if purchased separately.

 

To compute your casualty loss:

1. Determine your adjusted basis in the entire residential property before the casualty. Your basis is generally the cost of the property, adjusted for improvements and certain other events. For more information on determining your adjusted basis, see Publication 530, Tax information for First-Time Homeowners, and Publication 551, Basis of Assets.
2. Determine the decrease in fair market value of the entire residential property as a result of the casualty.
3. From the smaller of these two amounts, subtract insurance and any other form of compensation received or expected to be received.

For residential property, damaged and destroyed trees and other landscaping may adversely affect the fair market value of the entire property by reducing the curb or overall appeal of the property. You can refer to the following IRS web page for more information in determining the decrease in value of your property due to damage from a landscaping loss.

 

http://www.irs.gov/businesses/small/article/0,,id=171138,00.html

So you would not actually value the trees themselves, but instead would need to determine the decrease in the fair market value of your property as a result of losing these trees.

If this was helpful please press the Accept button.

Thank you ggdad.




Edited by Merlo on 9/26/2009 at 11:53 PM

Expert:	Merlo
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Answered:	9/26/2009

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