I suffered a business fire that resulted in a total loss of both my building and all property inside; insurance coverage reimbursed all costs to renovate and repair building. How do I claim/file this on my taxes?

[kb2825]

My business suffered a fire that resulted in a total loss. Insurance reimbursed the following expenses:

Building Remediation, Restoration and Renovation- everything insurance reimbursed was paid to our contractor/restoration company

Personal Property- everything insurance reimbursed was used to purchase new business property; we had additional expense that was not covered by insurance in this category

Ongoing Business Expenses and Business Income- obviously in this category I would claim the amount used for business income coverage; currently I have the entire amount in this category listed as 'Other Business Income' and have line item expensed the ongoing expenses and shown the rest as business profit. Is this correct?

How do I file/claim the payments from my insurance for building restoration and renovation and for personal property? I've seen people refer to cash basis in discussions about loss, but I'm unsure what my basis would be; is that relevant or necessary in this case? Have I accounted for the ongoing business expenses and business income properly? Thanks for any help on this!

[JosephS1]

Please clarify and expand upon your question/problem.  What type of entity is involved in the casualty loss?  Individual filing a Schedule C?  Partnership filing a 1065?  S-Corp filing an 1120-S?  A mixture of such as if the business was in a Subchapter S configuration but the building is owned by you personally and for which you paid yourself rent?

We would need more information about your particular status before we can advise you further.

@kb2825 

[kb2825]

Thanks for the response! I'm a single member LLC, file a Schedule C using TurboTax Home and Business. I own the building that my business is in. Let me know if you need more info! 

[RobertB4444]

Sounds like this doesn't really need to be reported much at all. 

The insurance reimbursement is not taxable.  Don't enter it.

You also can't enter any of the expenses that the insurance paid for.  Cost of contractors, etc.  Don't enter them.

You mention that you have extra expenses that were not reimbursed in the 'personal property' section.  If the amounts you spent were for new assets then enter them as such.  If it was just for supplies replacements and things like that then enter them as expenses.

Your ongoing regular business activities should be entered as you have always entered your income and expenses.  There isn't any change because of the fire.  So it shouldn't be 'Other Income'.  Just regular old income and expenses.  

The basis you have in your building hasn't changed.  You will continue to depreciate it just as you always have.  

It sounds like you got lucky and had good insurance.  Good deal.

@kb2825 

[kb2825]

Thank you so much!! Super helpful and makes me feel 1000% better sorting all of this out!