I'm trying to work out a casualty and it doesn't seem to be working out properly. Client had her rental torched by a disgruntled tenant. Basically the shell of the house was left standing. Client had insurance that covered the rebuild entirely. When I put the numbers into the 4684, it is showing a HUGE casualty gain which I don't think is right. Here's the numbers:
Original cost basis: 169,188
Depreciation: 81,680
Adjusted basis: 87,508
Insurance received: 253,105
Gain showing: 165,597
ALL of the insurance was used to rebuild the house. What am I missing?