Is the cost of replacing a damaged property considered a deductible expense, true or false?

The assertion that the cost of replacing damaged property is considered a deductible expense is true, but its applicability can vary based on the context.

When property is damaged and subsequently replaced, the costs associated with that replacement can often be deducted from taxable income, particularly for business property. However, for personal property, the ability to deduct such expenses may be subject to specific conditions, such as whether itemized deductions are claimed. In general accounting terms, if a business incurs expenses due to damage and replacement, those costs are deductible because they are considered necessary business expenses.

This is particularly relevant in the context of insurance. If a business has property insurance and pays for repairs or replacements due to a covered loss, those expenses can significantly impact the deduction calculations. Therefore, stating that such costs are a deductible expense is correct as it aligns with proper accounting principles regarding operational expenses.