Turning losses into gains

Losses incurred from spoilage, deterioration or obsolescence of assets is an inevitable part of doing business for most companies. Machineries may be damaged during use; equipment may be impaired as part of normal wear and tear; and inventories may be rendered useless, outdated, and obsolete due to advances in technology. But as the poet, Francis Quarles wisely wrote, “There is no worldly loss without some gain.”

While these losses are unfortunate, taxpayers have a path to relief in the form of deductible expense against their gross income for purposes of corporate income tax.