@Miki-2022 - I guess I am not tracking the issue. Are you saying that your accountant reported the insurance proceeds as taxable income?????? why????
<<So the damages were far more than what we received from insurance, however, this was still considered a gain. >>
are you sure about this? suggest talking to the accountant again as this statement doesn't make sense.
Let's say you bought a home for $500,000 and the house was insured for $350,000 (the rest was the land)
A fire occurs and destroys the house. You have replacement value insurance and the insurance company determines it is going to cost $350,000 to rebuild and they send you a check for that amount. There is NO taxable income (yet or maybe ever)
you have up to 4 years in a declared natural disaster to spend the money received from the insurance payment.
Scenario 1: You spend $350,000 to rebuild the home. THere is no taxable income
Scenario 2: you spend $325,000 to rebuild the home. $25,000 is considered taxable income.
