Thanks Amy, last question.
I found this in the IRS publication you sent.
Adjustments to Basis
If you have a casualty or theft loss, you must
decrease your basis in the property by any insurance or other reimbursement you receive
and by any deductible loss. The result is your
adjusted basis in the property.
If you make either of the basis adjustments
described above, amounts you spend on repairs that restore the property to its pre-casualty
condition increase your adjusted basis. Don’t
increase your basis in the property by any qualified disaster mitigation payments (discussed
earlier under Disaster Area Losses). See Adjusted Basis in Pub. 551 for more information on
adjustments to basis.
Does this mean my cost basis (which is $84,901 currently (114k original minus 29k depreciation) would actually be $84901+95k for repairs? Then key in the insurance reimbursement as 143? Then FMV of 137.5 and FMV after as 42.5?
Or does this apply to something else. Doing it the way mentioned before generates a tax bill of about 11k which seems too high but maybe thats accurate?
