You would claim the loss in the year is was sustained, so on your 2021 tax return in this case.
The basis in the property is first reduced by the fair market value of the property immediately before the casualty, less the fair market value just after the casualty occurred. I believe that is $30,000 in this case. It is then increased by the amount of insurance proceeds received, or $22,000 in this case. So, the adjusted basis would be $200,000 - $30,000 + $22,000 which leaves an adjusted basis of $192,000. So, the loss of $8,000 that you sustained reduces the original basis to $192,000.
The basis at the end of 2021 and in 2022 would be the same, $192,000.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
