Client paid $250K for rental property which includes $75k for the land. Back out the land and the depreciate basis (structure) is $175K.
From March 05 thru Dec 07, client depreciated $20K which leaves $155K ($175 - $20K).
Client rental burns in Dec 07. Clients received $9000 insurance proceeds.
Client replaces burned rental structure with new structure.
Isn’t the $155K reduced by insurance proceeds of $9K and also reduced by casualty loss on 07 tax return of $5K. If so the new amt is $141K. So what happens to the $141K? Is it added to the cost basis of the new replacement structure?
From March 05 thru Dec 07, client depreciated $20K which leaves $155K ($175 - $20K).
Client rental burns in Dec 07. Clients received $9000 insurance proceeds.
Client replaces burned rental structure with new structure.
Isn’t the $155K reduced by insurance proceeds of $9K and also reduced by casualty loss on 07 tax return of $5K. If so the new amt is $141K. So what happens to the $141K? Is it added to the cost basis of the new replacement structure?
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