There is no solution because there was never an agreement if the property was actually business property. The IRS does not mention vacation homes in the IRS link above, only properties such as a duplex.
Which Sections To Complete
Use Section A to figure casualty or theft gains and losses for property that isn't used in a trade or business or for income-producing purposes. Also use Section A to figure casualty or theft losses and gains related to the portion of your home used for business if you used the simplified method to determine your deductible expenses for business use of your home.
Use Section B to figure casualty or theft gains and losses for property that is used in a trade or business or for income-producing purposes.
If property is used partly in a trade or business and partly for personal purposes, such as a personal home with a rental unit, figure the personal part in Section A and the business part in Section B.
You can report the casualty loss on your tax return by following these steps:
- Click on Federal > Deductions & Credits.
- In the Other Deductions and Credits section, click on the Start/Revisit box next to Disasters, theft, and other property loss or damage.
- You will see the screen, Did you have anything damaged or stolen during a recent federal disaster? Click the Yes box, if applicable..
- Any allowable loss will appear on Schedule 1, line 14.
