Wildfire Casualty Loss/Gain

[g8r48]

We lost our home of 10 years in a federally declared wildfire and trying to understand how to file a casualty loss/gain. We purchased the home for 343k + about 30K in improvements so think the cost basis is about 373K. The FMV before the lost i would guess was between 675k-725k as a guestimate based on home sales in the neighborhood. Insurance reimbursed 672K (hit limits on dwelling replacement costs which by them show a 90K not reimbursed because of limits). We rebuilt the generally the same home, on the original lot with roughly same SF etc. for 720K. If if I just use the cost basis and insurance received I calculate a gain of 300K I think (373K  cost basis - 672K insurance received), but if i factor in what it cost to replace the home (720K rebuild cost - 672K insurance received) I see it as a loss of 48K. How does the replacement cost factor into this and how should it be reported in turbotax? Does it even need to be reported at all as I thought I read somewhere it's a like replacement?  We also had personal contents of 350K but limited by an insurance reimbursement of 250K is that considered a loss? Does it get included with the filing of the home or as a separate item?

[tagteam]

I think either @Mike9241 or @Critter-3 has answered a similar question.

[Critter-3]

Follow the interview screens in the program ... give what is asked for and let the program do the math on the form 4684 ... work the form yourself here : 

https://www.irs.gov/pub/irs-pdf/f4684.pdf

The home and the contents are entered separately but you can lump all the contents into one entry if you like.

[g8r48 · Accepted solution]

How does a rebuild affect a casualty gain as I read one way to avoid a casualty gain is to rebuild. Also I saw if you lived in the house a few years prior I read there is a 250k exclusion (500k if joint). How does that work? 

[Mike9241]

 you can elect under IRC 1033 to defer the gain on the home. you have a gain because the way the IRS looks at it is that the insurance company paid more than your basis. IRC 1033 allows deferral of the gain in case of involuntary conversion by acquiring replacement property costing more than the insurance proceeds.   in the search box start typing - election to defer gain Involuntary Conversion. if i understand the Turbotax instructions form 4684 is not included for the home. if you elect to defer the gain.  

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the personal property is more of n issue the rules say you have to figure any gain or loss for each individual item. see PUB 547 page 12

Both real and personal properties. When a
casualty involves both real and personal properties, you must figure the loss separately for
each type of property. However, you apply a
single $100 reduction to the total loss. Then,
you apply the 10% rule to figure the casualty
loss deduction.
Example. In July, a hurricane, which was a
federally declared disaster, damaged your
home, which cost you $164,000 including land.
The FMV of the property (both building and
land) immediately before the storm was
$170,000 and its FMV immediately after the
storm was $100,000. Your household furnishings were also damaged. You separately figured the loss on each damaged household item and arrived at a total loss of $600.