PHILIPSBURG:--- The declaration of hurricane losses is not in conformity with the normal accounting principles definitions or statements. The fact that businesses may have a profit prior to the hurricane impact and thereafter a no activity condition is not an excuse for escaping the tax assessment over the period in which profits were gained. Benjamin & Parker (This email address is being protected from spambots. You need JavaScript enabled to view it. clearly emphasizes that the Federal Tax Legislation does not refer to any leniency, special treatment and or tax exemptions after the impact of a natural catastrophe also referred as an ACT of GOD
The firm illustrates the taxation as follows:
Company profit before the Hurricane impact $50.000,=
Profit taxes due $17.250,=
Renovation costs $30.000,=
New taxation basis ($50.000-$30.000) $ 20.000,=
Recalculated profit tax $6,900,=
The current condition may be mathematically correct but the fact is that the losses of earning capacity and Losses of equity has a direct negative influence on your company’s value which is unfortunately not allocated anywhere in the year-end financial statement or in the tax environment as a reduction component.
The main question is how much time will it take for a business to regain its normal profitability and Corporate Market Value? The financial science teaches us that the losses are far beyond the renovation costs as mentioned in the example. Benjamin & Parker in its professional opinion and tax expertise wishes to clarify the following:
For losses to be declared there are 3 major components that should be considered (jurisprudence exists) when defining the financial damages:
- Accountability
- Responsibility
- Own Risk
These 3 component solidifies the argumentation that the losses were not deliberately self-inflicted creating a fiscal window for declaration of the damage losses mentioned. The science on damages indicates that the tax payer should calculate based upon its financial figures and projection the net worth recovery which is severely affected after a natural disaster. The firm confirms that by determining the mathematical cost scope of the suffered damages, can assure that taxation attempts by the Tax Office will be contained for years.
Currently, the specialists of Benjamin & Parker are constantly interacting on how to assist the SXM business community to avoid fiscal inconveniences for the year 2017 considering that the Tax Law does not dedicate or specifies taxation under special circumstances such as weather catastrophes.
Benjamin & Parker Press Release
