The Disaster Tax Relief Act is designed to assist those affected by disasters, such as hurricanes, and helps to ease the restrictions of the normal casualty loss rules.
Therefore, to calculate the decrease in FMV from a casualty, a determination must be made of the actual price the property could have sold for immediately before and immediately after the loss. The IRS also has worksheets to assist in the calculation of loss, and those can be accessed here:
Other measures can be used in calculating the loss due to casualty, such as cleaning up and making repairs. Many situations will require an independent appraisal of the loss before action can be taken. The appraiser must be a recognized expert in the field relating to the property being appraised. Even though appraisal fees can be significant, the lack of an appraisal can subject the taxpayer to penalties and other potential issues.