Calculate cost basis?

[chuckjim]

In 1999, my wife was gifted a piece of land for $1 from her grandparents. I built a single family home on that property where we have lived since then. In 2014, we lost the home in a wildfire and our insurance company paid us to rebuild and I personally rebuilt the house. How do I calculate cost basis on home? Is the cost basis the amount the insurance company paid me to rebuild my house?

[Mike9241]

basis comes from IRC code section 1033

(a)General rule
If property (as a result of its destruction in whole or in part, theft, seizure, or requisition or condemnation or threat or imminence thereof) is compulsorily or involuntarily converted—
(1)Conversion into similar property
Into property similar or related in service or use to the property so converted, no gain shall be recognized.

(b)Basis of property acquired through involuntary conversion
(1)Conversions described in subsection (a)(1)
If the property was acquired as the result of a compulsory or involuntary conversion described in subsection (a)(1), the basis shall be the same as in the case of the property so converted—
(A)decreased in the amount of any money received by the taxpayer which was not expended in accordance with the provisions of law (applicable to the year in which such conversion was made) determining the taxable status of the gain or loss upon such conversion, and
(B)increased in the amount of gain or decreased in the amount of loss to the taxpayer recognized upon such conversion under the law applicable to the year in which such conversion was made.

the basis for the land is the basis the grandparents had - a donee takes on the tax basis of the donor

since you rebuilt the house the rules above apply. 

[Opus 17]

Your basis is what you paid to build the house plus your basis in the land.  Because the land was a gift, your basis in the land is whatever the grandparents paid for it originally. This might be found in county records. If you don’t know what you paid to build the house, you can reconstruct or estimate as best you can. However, in case you are audited, the IRS is not required to award any basis that you can’t prove.   (You can include the cost of materials and labor that you paid for, the cost of architect plans, building permits, inspections, utility hook ups, and other expenses associated with building the house, but you cannot claim anything for the value of your own labor, if you provided free labor to the project.)  The fire and the insurance payout are ignored because they cancel each other out.