Yes. I received insurance payment, and I just realized that it created the whole new tax reporting complexity. Maybe it even warrants a separate post, but in nutshell, here is what I have (all numbers are rounded for simplicity):
I received $30K in insurance proceeds. Since IRS requires estimating fair market value of the lost property, I estimate the old kitchen to have basis of $25K and depreciation prior to the loss - $4K. This looks like $9K casualty gain? Where and how does it have to be reported in TT, if any?
On the other hand, I spent $40K to put together a new kitchen. Do I add it to my assets with the basis of $40K?
What should generally be my entries, especially changes to the assets and their basis? This would have a great impact on capital gains.
