Department Of Taxation Announcement Form No. 2004-17 Hawaii (Page 2 of 3) in pdf

Department Of Taxation Announcement Form No. 2004-17 Hawaii Page 2

Department of Taxation Announcement No. 2004-17

November 4, 2004

Page 2

date of the return, an amended return should be filed when the information becomes

available.

III.

Special Consideration

The Department will consider requests for extensions to file and pay other taxes

and waivers of penalties and interest on a case-by-case basis. Each request should

include a statement as to how the 2004 Manoa Valley flood adversely impacted the

taxpayer.

IV.

Casualty Losses

For purposes of the Hawaii Income Tax Law, you may claim all of the casualty

loss deductions allowed by § 165 of the Internal Revenue Code. Casualty losses on

business property are deductible in full. The first $100 of the eligible unreimbursed

casualty losses on nonbusiness property is not deductible. The remaining loss is

deductible to the extent it exceeds 10 per cent (10%) of the taxpayer's Hawaii adjusted

gross income. The following options are available after you have determined the amount

of your losses:

1. In the event that the President of the United States of America issues a

proclamation of a natural disaster, taxpayers may claim a casualty loss deduction

on their 2003 income tax returns for losses from the rains and flooding on October

30 and 31, 2004 (an amended return must be filed if this option is chosen); or

2. Taxpayers may elect to deduct the losses on their 2004 income tax returns; or

3. Taxpayers may elect to deduct the losses in five (5) equal installments over a

period of five (5) consecutive years, beginning with the 2004 income tax return;

4. If your casualty loss is more than your income, you may have a net operating loss.

A net operating loss may be used to lower your taxes in an earlier year, allowing

you to receive a refund for taxes that you have already paid. Or if you properly

elect, a net operating loss may be used to lower your taxes in a later year. You do

not have to be a business to claim this benefit; all taxpayers may claim this

carryback or carryover net operating loss.

General Excise Tax Exemption for Insurance Proceeds Received Because of a

Natural Disaster, § 237-24.7(6), HRS

On October 31, 2004, the Governor signed a State Disaster Proclamation in which

she determined (pursuant to § 209-2, HRS) that a disaster had occurred in the Manoa

Valley area. Therefore, taxpayers may be eligible for this general excise tax exemption if

they receive amounts under property and casualty insurance policies for damage or loss

Department Of Taxation Announcement Form No. 2004-17 Hawaii Page 2