The property was not totally destroyed ... so you don't have a casualty loss to report. If you did get some insurance money for the damage then it is either reported as income on the Sch E and the repairs it paid for entered as repair expenses on the Sch E or neither is entered ... your choice.
Deducting the Cost of Cleanup and Repairs
The cost of repairing or replacing business property damaged or destroyed in a casualty event is not part of a casualty loss; neither are cleanup costs. The cost of restoring property destroyed or damaged due to a casualty event ordinarily must be capitalized (depreciated) and added to the property's basis.
