There is no legal requirement for you to use an insurance settlement to exactly replace the lost or damaged property. For example, if you get an insurance settlement for a stolen high-end expensive TV, you’re not required to use it to buy another high-end expensive TV. And as your CPA said, there is no taxable event unless the settlement amount exceeds your original cost. Otherwise, the settlement is just making you whole, which is not a taxable event.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
