IRS Releases Temporary and Proposed Regulations on Section 165(i) Election

Posted by Kim Chen on November 22nd, 2016

Under IRC Sec. 165(i), a taxpayer may elect to treat a loss attributable to a federally declared disaster as sustained in the taxable year immediately preceding the year in which the disaster occurred. The IRS has issued temporary and proposed regulations (TD 9789) that clarify that a Section 165(i) election is generally due six months after the due date (without considering extensions) for filing the taxpayer’s federal income tax return for the disaster year. In addition, the IRS released Rev. Proc. 2016-53, which provides procedures and requirements for making and revoking the election. The temporary regulations, which also serve as the text of the proposed regulations, are effective 10/13/16. (The rules are effective immediately because the IRS anticipates a significant number of casualty losses from recent floods.) Temp. Reg. 1.165-11T; Prop. Reg. 1.165-11 ; Rev. Proc. 2016-53, 2016-44 IRB .

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