Yes, you want to claim a loss for what you spent out of pocket. If the insurance company gave you 268K for repairs, add what you spent, plus your deductible, and that is the FMV of the property prior to the loss (about 278K, approximately). The FMV of the property after the event is $0.
Report the 268K as insurance reimbursement, and you are claiming a loss of the remainder. In other words, it took 278K to restore you to wholeness; 268K of which insurance paid for.
@ForestRanchSteve
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