Thank you! To clarify, this is no different if the payment is received by an LLC, correct? Do you happen to have an IRS document or other document I can refer her to to back up that it shouldn't be income? If we enter the roof as an improvement in 2024 taxes, does there need to be something to offset the purchase? I think our accountant is trying to make sure the insurance claim and payment are both accounted for, and that is what's causing the issue.
I've seen other posts with response similar to this one below (but to me, it makes more sense that it isn't taxable): In reference to the insurance premiums being deductible expenses: "Therefore, any payout on that policy is reportable income and may also be taxable. Typically, what the insurance pays out for is the loss of an asset that was being depreciated. The taxability of the payout can be offset by claiming the remaining depreciation of the asset that was lost, as a loss in the Casualty and Thefts section of the program under the Deductions & Credits tab.
For you, the first thing you have to do is figure the value of "just" the roof that was replaced, which would be a percentage of the entire value of only the structure. Then the depreciation taken on the roof would be an equal percentage of the total depreciation already taken on the entire structure. Then you can claim a loss on that value only for the percentage of depreciation "not" already taken on that value."
