@chuckjim
I think you are getting confused and overthinking.
What do you mean “the gain was deferred”? You could have taken a casualty loss deduction in 2014, if you didn’t plan to rebuild. You would possibly have had a gain if the insurance payout was more than the rebuilding cost, but that gain could not have been postponed. If you took a casualty loss in 2014 and then got a payment in 2015, that would have been taxable in 2015 or the 2014 return would have to be amended.
Let’s get clear once and for all.
1. How much did you pay to build the house in 1999?
2. How much was the insurance settlement after the fire in 2014?
3. How much did it cost to actually rebuild the house after the fire?
4. Did you claim a casualty loss on your 2014 tax return or do anything else on your 2014 return in relation to the fire?
