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Casualty and Subsequent Sale of Repaired Property - How to report?


gfizer

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Client purchased a vacation rental in September 2014 which was placed in service in December 2014.  Purchase price was $185,000 - $11300 allocated to land (per property tax bill) and $173,700 allocated to cabin.  In April of 2015 an arsonist saw fit to set fire to the cabin.  The cabin was gutted by fire but not completely destroyed.  Insurance paid $157,000.00 and client spent $112,500.00 to repair the property.  Once the property was repaired the client decided she wanted no part of it and sold it in an arms length transaction on December 9th for $113,000.00.  I keep chasing my tail on this one.  How do I report it?  Do I have to go through the casualty loss calculation on Form 4684 or can I just report everything on Form 4797 for the sale of the property, taking into account the receipt of insurance proceeds and cost of repairs in the calculation of the basis of the cabin?

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