I think that the basis should remain unaffected as per Rev Rul 71-161
https://www.irs.gov/pub/irs-utl/am2006006.pdf
Casualty Loss Hurricane Sandy
Yes I would say you have a wash here because you're reducing basis by the amount of insurance funds you got and then increasing basis by the amount spent on restoring the property to its original state.....it's a wash except for the $2k you're out from the deductible.
