Quake Throws Off Tax Timing : Deadline: Uninsured losses can be claimed on either 1993 or 1994 returns. IRS and state expect many requests for filing extensions.

With Friday the deadline for filing income taxes, the disaster-weary can at least look forward to some tax relief: Uninsured casualty losses from the Jan. 17 Northridge earthquake--as well as from last fall’s fires and mudslides--are deductible on individuals’ federal and state returns.

Moreover, because the Northridge quake was declared a federal disaster, victims of the temblor can choose to take those losses on either their 1993 or 1994 returns. That is a major advantage for people who expect their 1994 incomes to be lower.

But doing all this additional figuring can take time--which is why many people are expected to ask the Internal Revenue Service and California Franchise Tax Board for filing extensions this year.

“No doubt there will be a lot more extensions than usual,” predicted Paul White, a partner in the Sherman Oaks accounting firm White, Zuckerman, Warsavsky and Luna. Among his own clients, “more people who usually file early are at least waiting until the last minute.”

White’s firm is temporarily renting offices in Burbank because the quake demolished the accountants’ headquarters. The firm was relieved, he said, when it was able to find or recover all the records needed to prepare its clients’ 1993 returns.

But many taxpayers haven’t been so lucky, losing important documents that they need to file their 1040s because the quake damaged their houses or local post offices.

“Just about every client I’ve worked with has lost at least some records,” said Alan Kennan, a tax partner in the Los Angeles office of accounting firm Grant Thornton.

Others will have to file extension requests with the IRS (Form 4868), because “they are still waiting for the simplest of records,” said Elaine Blackman, tax manager at White, Zuckerman.

Those records may include W-2s from their employers or 1099s showing investment income, she said.

In such cases, “the government basically expects you to reconstruct your income and deductions for 1993,” Kennan said.

“You could probably do most of it by getting copies of all the checks you wrote during the year.”

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If people still end up having to guess at, say, how much they gave to charity in 1993, label it an estimate, he advised. But they should be conservative, he said, because the government will check it carefully.

“If you’re a person making $100,000 a year and you said you made $5,000 of charitable donations last year, an auditor would say that’s reasonable,” said Kennan. “But if you said you (made) $50,000, you better have proof.”

Even figuring out your deductible casualty loss can be a headache.

“First you have to get a real estate appraiser to tell you what the value of your property was before the disaster and after,” Kennan said. The difference is your tentative loss.

Insurance payments must be subtracted from that tentative loss, producing a net loss figure.

But there is a catch: To be deductible, casualty losses must exceed 10% of your adjusted gross income--basically income before itemized deductions--plus $100.

Kennan offers this example:

Suppose the quake caused extensive damage to a house that was worth $300,000 before the shaker, leaving it worth only $200,000 when the shaking stopped. The homeowner’s tentative casualty loss would be $100,000.

Subtracting $30,000 of insurance payments produces a net loss of $70,000.

“Now, we look at this homeowner’s adjusted gross income and find it was $200,000,” said Kennan.

Subtracting $20,000, or 10% of $200,000, from $70,000 results in a net loss of $50,000. Finally, “we subtract $100, which gives us a deductible casualty loss of $49,100.”

Rep. Howard L. Berman (D-Panorama City) has introduced federal legislation to make uninsured losses 100% deductible for victims of declared national disasters.

In California, state Sen. Herschel Rosenthal (D-Los Angeles) has authored a bill that would provide identical relief for disaster victims on their state tax returns.

Neither bill is expected to pass by Friday, spokesmen for Berman and Rosenthal said Tuesday.

However, if the proposed legislation is enacted later, taxpayers entitled to the bigger write-offs could file amended returns. The tax breaks would apply to losses on declared disasters that occurred on or after Jan. 17, the day of the Northridge quake.

Deciding whether to take the limited loss that is available now this year or next year may be easy for people faced with extensive rebuilding--but still waiting for disaster aid.

“The question is how badly do you need cash now?” said Kennan. “Fixing your house may be more important than waiting a year to get a bigger deduction.”

Requesting an extension to sort all this out before filing taxes can provide nearly six months’ reprieve--to Oct. 14 this year, since Oct. 15 falls on Saturday.

But even with a filing extension, the IRS and the California Franchise Tax Board still expect checks for about 90% of the amount owed to be in the mail by midnight this Friday, April 15. And although it is possible to get an extension for paying federal taxes, it is certainly not automatic.

“It’s extremely difficult,” said Harvey Bookstein, managing partner of Los Angeles accountants Roth Bookstein & Zaslow.

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Bookstein, who lives in Tarzana, suffered about $400,000 of quake damage himself. He has already decided to take his casualty loss in 1994, when he expects his income to be lower than it was last year.

If it’s absolutely impossible to even borrow to pay your federal taxes, you can file an “Application for Extension of Time for Payment of Tax” (form 1127) by midnight Friday. Accountants say the IRS usually will agree to negotiate some kind of payment plan.

The state does not grant extensions per se, said Franchise Tax Board spokesman Jim Shepherd. But he said that people with quake damage should make the state aware of their situation.

“If someone is assessed a penalty for filing late or paying late and it was because of the earthquake, we will be lenient if they protest the penalty,” Shepherd said. “We’re the same way when there is any type of catastrophe.”

Help at Tax Time Need help with your tax returns? Or finding a post office that will be open until midnight Friday, April 15? Here are some places you can call or visit to get answers to tax questions, obtain forms or mail your returns at the last minute.

* IRS Tax Help Hot Line: (800) 829-1040, staffed between 8 a.m. and 5 p.m. Bilingual assistance: (800) 829-4672.

* Federal tax forms only: (800) 829-3676.

* IRS offices offering taxpayers walk-in assistance only: 300 N. Los Angeles St., Los Angeles; 9050 Flair Drive, El Monte; 6230 Van Nuys Blvd., Van Nuys; 11000 Wilshire Blvd., Room 7201 West Los Angeles.

* For the post office nearest you that will be open until midnight Friday: (213) 586-1463.