Insurance proceeds

[toddrub46]

I received insurance proceeds for damage to my business vehicle but I chose not repair it, and I did not replace the vehicle as it is still totally functional. Where do I report these proceeds in the TT forms, as I assume they are taxable?

[LenaH]

No, you do not have to report this as taxable income. 

You would only report this on your tax return if the insurance company paid more than what the car was worth (the fair market value). However, it is safe to assume this is not the case since your car is still functional and did not get totaled. 

[toddrub46]

Thank you for the quick response, but please understand that I pocketed the cash and made no repairs. If that’s not taxable as miscellaneous income, is it perhaps a basis adjustment to the damaged vehicle? 

[DaveF1006 · Accepted solution]

If you pocketed the proceeds then this is reportable as miscellaneous income because the intent was never to fully repair the vehicle. 

[toddrub46]

Thank you, that's what I was assuming. And I can see that TT put the amount on Line 6 of Schedule C as expected.