Reimbursement for Employee Losses

A business was destroyed by fire. Employees lost personal property, some business related and some not. The employer (apparently not insurance) is reimbursing the employees for their losses.

Is that taxable? Does the employer need to include that in a 1099 or W-2?

My thought is that it shouldn't be taxable. But it's apparently not coming from a "wrong-doer" or insurance. I haven't been able to easily find any authority on this point.

Any thoughts?

Thanks.

Reply to
Stuart O. Bronstein
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Read this article in the Journal of Accountancy and the referenced Revenue Ruling. I don't believe the fire that you describe meets the definition of a qualified disaster under Section 139. As such, the payments would be compensation.

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Reply to
Alan

Thanks, Alan. I really appreciate your insight.

Reply to
Stuart O. Bronstein

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