Defective Chinese-made Drywall
by Linda Beale
crossposted with Ataxingmatter
Defective Chinese-made Drywall–safe harbor to claim repairs are casualty losses
In IR 2010-102 (Sept. 30, 2010), the IRS announced that damages from corrosive drywall would be able to be treated as a casualty loss, and in Rev. Proc. 2010-36, there is a “safe harbor” formula for determining the amount of the loss. The Rev Proc also provides a link to the Drywall Information Center, for guidance on identifying problem drywall.
The drywall, manufactured in China, has high levels of hydrogen sulfide and can result in corrosion of copper in appliances and wiring and high levels of gas. If a taxpayer doesn’t have an existing or potential claim for reimbursement, the casualty loss is the unreimbursed repair cost; if there is a claim, the taxpayer may take 75% of the unreimbursed amount. Amounts that increase the value of the house above its pre-loss value are not counted as part of the casualty loss. Depending on the actual amount of the reimbursement, the taxpayer may have income or an additional deduction in the year of the reimbursement. There are of course additional limitations to casualty loss claims: only taxpayers who itemize may take casualty losses, the first 100 of the loss is not deductible, and the loss is only deductible to the extent that it exceeds 10% of adjusted gross income.
Never buy drywall from a country that doen’t use it.
FWIW, my understanding that Chinese drywall was not used to skimp on expenses, but rather because of the housing bubble, there was a shortage of U.S. supplied drywall.
And here I have a dilemma.
I don’t think tax policy is the place to resolve all life’s problems.
On the other hand, I have no objection to a business subtracting its costs before it pays taxes on its income. No good reason I can think of that this shouldn’t apply to an individual taxpayer… “a business of one.”
Still think it would be better to get the Justice Department involved in settling this through the law… claims by homeowner against contractor against supplier against factory. Certainly the Chinese owners of the factory… would find it to their ultimate advantage to pay up. Or maybe something could be written into the trade agreements to hold the other government responsible for “regulating” it’s own manufacturers?
This was more a clarification of casualty loss rules already in place, saves a bunch of correspondence and litigation later.
The real problem is our government continues to toady to the Chinese, despite poison medicine, poison toys and poison drywall.
They make cheap shoulder fired anti-aircraft missiles too. You can get a Stinger knockoff for only $10K.
I can?
Probably. Check with your local gang, or the Vancover, BC Triad for wholesale pricing. I read that around year 2000, so there may have been some inflation since then.
I can finally get Calvin a Christmas present he will really enjoy!
The Triad does make you sign a release form stating that if you use the product around airports, shoot down any Black Helicopters, or blow the roof off your house, the Triad, the manufacturer, and The Peoples Republic of China are not responsible. It is up to you and your CPA to determine any tax treatment of such actions, should they occur.
Dry wall is made with Gypsum which is a very soft mineral composed of calcium sulfate dihydrate, with the chemical formula CaSO4·2H2O.
Hydrogen sulphide is a gas and smells like rotten eggs. The smell is very noticeable at the parts per million level. It is not believeable that installers and householders do not notice the smell IMMEDIATELY.
This looks like another china bashing story with no real basis nor scientific proof. Americans show that they are really dumb by sprouting the rubbish comments here.
ngk loong
and you show that you are really dumb by believing that china can do no wrong.
i don’t know what the facts about the drywall are, but even Americans have better things to do than install and remove drywall just to bash China. perhaps if you looked into the problem more carefully you would discover why the smell was not noticed IMMEDIATELY.
you might find that temperature and humidity have something to do with it. homes are generally warmer and more humid than construction sites or warehouses.
but the real problem here is that loong is like most people. there is something he doesn’t want to believe so he latches on to a “scientific” fact to “prove” it can’t be true.
trouble is the connection between the scientific fact and the problem under discussion usually turns out to be a giant leap of faith.
btw
a very superficial look at the “literature” suggests that the hydrogen sulfide has nothing to do with the gypsum. it appears to come from contaminated materials used in processing the gypsum.
what loong does is typical. he takes a “fact” from first year chemistry… gypsum is a sulfur containing compound… stands that up alongside the fact that hydrogen sulfide is a sulfur containing compound… even though the one fact has nothing to do with the other fact or the problem at hand, but they form an associative link in his brain so he presents them as if they were someone linked in the real world, and since he “knows” that hydrogen sulfide stinks, he “knows” that everyone must immediately have noticed it at any level of concentration under any conditions of temperature and humidity and proximity and air circulation… no need to confuse yourself with the complications when the Central Fact you are desperate to prove is that there is a Conspiracy to Defraud or Defame Your Side.
In humid environments, like the south part of the US where new building occurred, the excess sulfur combines with water to make sulfurous acid. This is weaker than sulfuric acid, but does corrode copper, and AC coils fail after just 5 years. It has a similar effect on your lungs. So it is a little more serious than “rotten egg smell”, annoying as that may be in the brand new McMansion.
Cedric
actually, given the choice between corroding the coils on my AC and putting up with rotten egg smell, i’d say the rotten egg smell is more serious.
but i’m funny that way. haven’t gotten to where i determine the quality of my life by dollars and cents.
But you may have to buy a new pair of lungs too.
Cedric
I have spent much of my life avoiding living downwind of either public or private stink. It has helped me a good deal that I don’t add up the dollars and cents to make my “decision.”