I realize that cost basis (depreciated structure value) is offsetting the insurance reimbursement.
That depends on how you're looking at it.
If you look at it as if you sold the structure to the insurance company, then your gain/loss on the sale is the depreciated value of the structure against the "sale price" the insurance company paid. If the insurance was more than the depreciated value, you have a gain. If it was less, you have a loss. More than likely though, my bet is you have a gain.
There is one catch though if you just report the whole thing as a sale, with your sale price being the total of what the insurance paid, plus what you got the the land. If sold at a gain, you need to show a gain on both the structure and the land sale. Likewise for both if sold at a loss. The reason you have to do this with TurboTax, is because the program sometimes has issues with doing the math correctly on the depreciation recapture. So if you have a gain on some assets in the group, and a loss on others, the program "might" do the math correctly. Then again, it might not. It just depends on what the actual numbers are. (cost basis, depreciation amount, sales price, sales expenses, etc.) But the real pain is if the bottom line numbers aren't right, but the math works, then as far as the program is concerned, all is okay. So nothing gets flagged on the final error checks performed just before you e-file. It all has to do with the taxation of the recaptured depreciation.
