Since this is with your brother, are you reporting the rental income/expenses on a 1065 Partnership return?
Technically, when the old building burned down the new rebuild becomes a new asset. So you need to sell the old asset at a loss (received $0 in the sale)
Disagree. There was an insurance payout. The old structure was sold to the insurance company for the amount of the payout. I expect it would still be sold at a loss after that, but it accounts for the payout for what that payout was really for.
Keep in mind that the land was not insured. Only the structure. So you still own the land and the cost basis of the land does not change, as the land was not sold to anyone. So dealing with this in TTX is going to be complicated.
The new structure cost basis is the amount of the insurance payout, plus whatever was paid out of pocket.
Being that
