loss of rent payment

[jimenright]

Taxpayer had a tree fall on house. Insurance paid for repairs. Insurance also paid for loss of rent while home was not rentable. Would the loss of rent payment be reported as rent income or as gain on casualty loss?

[Koss]

Insurance Payment

Taxpayer had a tree fall on house. Insurance paid for repairs. Insurance also paid for loss of rent while home was not rentable. Would the loss of rent payment be reported as rent income or as gain on casualty loss?

What difference does it make?

BMK

[mastertaxguy]

Loss of rental income-insurance reimbursement.

1. There was 2012 post regarding a similar issue (Insurance Compensation.)
2. One of the posters took the position that insurance reimbursement for loss rent is income [presumably rental income].
3. Curiously, IRS publication 527 on rental does not contain specific language on insurance reimbursement for loss rent.
4. But equally curious, IRS Publication 334 (for 2013) does state that loss income payments are reported as income, even if the business (schedule C) was inactive when received.
5. At the end of the day, as BMK has hinted, it may not make any difference if the rental reimbursements/loss rental payments are part of the casualty loss or shown as rental income.
6. CCH MTG, Pp. 294/295 (Para. 759) cites Reg. 1.61-14(a) as authority for treating proceeds from business interruption insurance [loss of rental income????] as taxable as ordinary income.
7. I for one would treat it as rental income if for no other reason than the insurance company likely will send a 1099 of some type.
8. To me, combining such payments with other payments for property damage/repairs, etc. may cause some issues with depreciation adjustments and subequent year depreciation (change in accounting?????).

[jimenright]

Thanks for replys

I was not able to find a normal/preffered method for reporting. I will report as rent. The casualty loss repairs were paid by insurance. This way I will not have to file casualty loss form. There is no 1099 only a letter proclaiming the payment.

[Roland Slugg]

I will report as rent.

FWIW that's what I would do.

[Gary2]

I'd report as rent, too.

But wouldn't 1231 treatment make a potential difference if it were reported as a business transaction on the 4684?