Get your taxes done using TurboTax

Answer Yes to the Special Handling question. A casualty in business can result in a gain or a loss depending on insurance proceeds.  The transaction is treated like a sale whether or not you receive an insurance reimbursement. If there is no insurance, the remaining cost basis will be a loss against other income.

With your TurboTax return open use the steps below to complete your entry.  Steps do not vary between TurboTax versions.

1. You will record the necessary information in the rental asset(s) involved in the casualty. You will enter the disposition date as you indicated in the asset under the rental activity. 
2. Correct the prior depreciation if necessary (uncommon if TurboTax was used since it was placed in service. The depreciation will be a partial year since it was removed from service.
3. When the question comes for special handling you will answer 'Yes'; because it was lost, damaged or stolen.
4. Continue to through the rental activities until you arrive back to the Wages and Income screen.
5. Next, select the Deductions and Credits section, scroll to Other Deductions and Credits (Show more if necessary)
6. Select Disasters, theft, and other property loss or damage > Start / Revisit
7. Answer 'Yes' you had something damaged > Enter your description (Hurricane), date and select Income-Producing Property (e.g. Business property, Investment property) > Continue 
8. Select 'No' it was not used in a passive activity (based on your statement of material participation)
9. Enter the description of the asset  and other requested information (cost basis will be the original cost less depreciation), enter insurance reimbursement if applicable.
10. Be prepared for the fair market value (FMV) at the time of the loss (can be the remaining cost basis) and the value after which may be zero (you must make this determination).
11. Continue to complete the casualty information until you are back at the main Deductions and Credits screen.
12. You can view your forms by using Forms in TurboTax Desktop or before filing but after payment in TurboTax Online.(Form 4684, 4797)
13. See the images below