Not sure if I should add complexity to this question here but we have the same situation except we received the initial insurance payout in the year of the fire (California 2017) and a second payment in 2019 when we purchased an existing replacement property. We sold the land in 2019 also. To further explain. In 2017 we postponed the gains by declaring a 1033 thinking to rebuild. In 2018 we reported loss of rent insurance and property taxes on land in Sch E. without taking depreciation. After several months of contractor delays we decided to exit the rental business and pay the gains. We were concerned about how the IRS would look at not following through on the 1033 and not paying the gain on the 2017 insurance payment so we amended the 2017 taxes using the 4684 form like mentioned above. We were uncertain how to handle the second (2019 payment) so we added it to 2017 for the full gain. We knew we would be in a similar tax bracket in 2019 so the tax hit would be the same. Maybe this is beyond the scope of this forum but if there is any CPA's that can guide us fire victims we would be grateful. Thanks.
