Business Taxes

Business Interruption Insurance Proceeds


The IRS does not agree with the Tax Court over whether business interruption insurance proceeds must be reported as earnings subject to self-employment tax.

In a case involving a grocer, the Tax Court said the insurance payments for lost earnings were not subject to self-employment tax because the payments were not for actual services.

The IRS disagrees. They say the income would have been earned had the operations not been interrupted.