rental property fire and insurance

[Bucky]

Taxpayer had a rental that caught fire. Insurance co paid off the mortgage. Taxpayer sold property for $6000. Did not fix fire damage. He is going to have a sizeable loss on the sale. Does he have a gain from the insurance proceeds. My head hurts and I can't wrap my hands around this one.

[taxea]

I would think they would be adjusted off the loss

[jimenright]

The

taxpayer has a casualty loss. /FMV before fire/ less /FMV after fire/ less /insurance payment/ equals /casualty loss/. The sale is treated like any other sale of business property on form 4797. The insurance payment is handled with the casualty loss.

Taxpayer had a rental that caught fire. Insurance co paid off the mortgage. Taxpayer sold property for $6000. Did not fix fire damage. He is going to have a sizeable loss on the sale. Does he have a gain from the insurance proceeds. My head hurts and I can't wrap my hands around this one.