If you elect to defer gain by purchasing qualified replacement property, you won't have to transfer the gain to Schedule D, but you must attach a statement to your tax return explaining the date and details of the casualty or theft, the amount of insurance, how you figured the gain, and that you are choosing to postpone gain by purchasing replacement property.
If you've already done the replacing, include information about the property, the postponed gain, the basis adjustment that reflects the postponed gain, and any remaining (unpostponed gain) you are reporting on Schedule D. If you make the replacement in a later year, attach a statement including this information about the replacement property to the tax return for that later year. If you expected to replace property but then didn't, or replaced at less than the full amount, you'll have to go back and amend your tax return for the year you claimed the loss.
