@ThomasM125 I disagree with you as follows:
You would claim the loss in the year is was sustained, so on your 2021 tax return in this case.
>> Agreed
2021 Tax return:
As for the reduction in basis, it would go down from $200,000 - $30,000 = $170k
One would never add the insurance payout back in the basis unless it is used to restore the property.
However, the deductible casualty loss for the year would only be $30k-$22k = $8k
2022 Tax return:
After paying the $30k to the contractor to complete the restoration, I would increase the basis for property from $170k to $200K
