Casualty Loss with an SBA Loan
(04/13) Q: If a taxpayer secures a low-interest disaster loan from the Small Business Administration what effect will it have on calculating a casualty loss?
A: A low-interest disaster loan from the Small Business Administration loan must be repaid and therefore does not reduce the casualty loss amount. However, amounts of the loan, if any, which are cancelled or forgiven are included in gross income in the year of cancellation. Additionally, insurance or other reimbursements received and not required to be repaid will reduce the casualty loss.