The federal income tax law allows individuals whose property is destroyed by a natural disaster such as a fire or hurricane to reduce their taxable income by the amount of their financial loss. This rule is intended to improve the:

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The rule allowing individuals to reduce their taxable income by the amount of their financial loss due to a natural disaster is intended to improve the horizontal equity of the tax. Horizontal equity means that taxpayers in similar financial situations should be treated similarly. By allowing for deductions based on financial losses from natural disasters, the tax system is recognizing and adjusting for the financial impact on those affected, thereby treating them similarly to others who have not suffered such losses.

The Federal Income Tax Law Allows Individuals Whose Property Is