Important Changes Interest abatement in federally declared disaster areas. For individuals living in an area declared a disaster area by thePresident after 1997, the IRS will abate interest on income tax forthe length of any extension granted for filing income tax returns andpaying income tax for 1997 and later tax years. For other taxpayers located in an area declared a disaster area bythe President in 1997, the IRS will abate interest on income tax forthe length of any extension granted for filing income tax returns andpaying income tax years beginning after 1997. For more information,see Disaster Area Losses, later. discount hotels in BathDeduction limit for losses of income-producing property. The casualty or theft loss deduction for income-producing propertyallowed to individuals on Schedule A (Form 1040) is no longer subjectto the 2%-of- adjusted-gross-income limit. This change is effectivefor tax years beginning after 1986. If you previously claimed this deduction (or could have claimed itbut for the 2% limit) for any year beginning after 1986 and before1998, and the time limit for amending your return for that year hasnot expired, you may be entitled to an additional deduction for thisloss. To claim any additional deduction, file Form 1040X, AmendedU.S. Individual Income Tax Return. In Part II of Form 1040X,write "Casualty or Theft Loss of Income-Producing Property underPublic Law 105-277." Form 1040X must be filed within 3 yearsafter the date you filed the original return or within 2 years afterthe date you paid the tax, whichever is later. A return filed early isconsidered filed on the due date.