IRS Designates Chile Earthquake a "Qualified Disaster"


On Tuesday, the IRS designated the Feb. 27 earthquake in Chile as a “qualified disaster” for purposes of IRC § 139 (Notice 2010-26). As a result, victims of the earthquake who receive qualified disaster relief payments will be able to exclude those payments from income. The notice also allows employer-sponsored private foundations to assist their employees in areas affected by the earthquake without jeopardizing their tax-exempt status.

 

Qualified disaster relief payments are defined by section 139 as amounts paid:

(1) To or for the benefit of an individual to reimburse or pay reasonable and necessary personal, family, living or funeral expenses (not otherwise compensated for by insurance or otherwise) incurred as a result of a qualified disaster; or

(2) To reimburse or pay reasonable and necessary expenses (not otherwise compensated for by insurance or otherwise) incurred for the repair or rehabilitation of a personal residence or repair or replacement of its contents to the extent that the need for such repair, rehabilitation or replacement is attributable to a qualified disaster.

The IRS must declare that a disaster is a “qualified disaster” for payments to meet these criteria.

 

Under the notice, employer-sponsored private foundations will be allowed to make qualified disaster relief payments to employee victims of the earthquake without affecting their tax-exempt status under the private inurement rules of Treas. Reg. § 1.501(c)(3)-1(c)(2). The IRS will presume that qualified disaster relief payments made by a private foundation to its employees and their family members in areas affected by the earthquake are consistent with the foundation’s charitable purposes (IRS News Release IR-2010-28).

 

SPONSORED REPORT

Revenue recognition: A complex effort

Implementing the new standard requires careful judgment. Learn how to make significant accounting judgments and document them and collaborate with peers for consistent application.

TECHNOLOGY Q&A

How to create maps in Excel 2016

Microsoft Excel 2016 has two new mapping capabilities. J. Carlton Collins, CPA, demonstrates how to make masterful 2D and 3D maps in Excel 2016.

QUIZ

News quiz: Taking an economic snapshot and looking to the future

Recent news included IRS actions that affect individuals and partnerships and a possibly influential move by a Big Four accounting firm.Take this short quiz to see how much you know about the news.