joanmcq Posted March 30, 2022 Report Share Posted March 30, 2022 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? Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 30, 2022 Report Share Posted March 30, 2022 She is able to defer the gain because of reinvesting all in the newly rebuilt property. She would recognize gain on any proceeds NOTreinvested. It's an election, and you have to attach a statement with all of the details. I have one now that was a fire of a personal residence with replacement value insurance and the rebuild spanning 2021 and 2022 with many delays and constantly revised project costs because of escalation of materials costs due to availability and shipping issues due to covid. 1 Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 30, 2022 Report Share Posted March 30, 2022 https://www.wolterskluwer.com/en/expert-insights/casualty-loss-rules-differ-for-personal-and-business-property#:~:text=If you elect to defer,that you are choosing to 1 Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 31, 2022 Report Share Posted March 31, 2022 Pub 547 has the information on what is required to be included in the statement you need to attach. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted March 31, 2022 Author Report Share Posted March 31, 2022 This one I didn’t learn about until this year, although the fire happened in 2020. It wasn’t finished and re-rented until 2021. Do I need to check a box in ATX or does filing the election take the gain away? Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 31, 2022 Report Share Posted March 31, 2022 22 minutes ago, joanmcq said: This one I didn’t learn about until this year, although the fire happened in 2020. It wasn’t finished and re-rented until 2021. Do I need to check a box in ATX or does filing the election take the gain away? sec 1033 election is made by not reporting the gain in the year of loss & reimbursement. The tax years remain "open" during the replacement period, and if the replacement doesn't occur or if the gain isn't fully deferred b/c not enough was reinvested (if TP used money for something else like a car or trip, etc), then you'd go back and amend. I'd still attach the statement. This is an older article but explains it well: https://www.journalofaccountancy.com/issues/2002/sep/thetimingofsection1033elections.html The instructions to 4684 also has information on gain deferral and timing of replacement. 1 Quote Link to comment Share on other sites More sharing options...
joanmcq Posted April 1, 2022 Author Report Share Posted April 1, 2022 I found the election in ATX. Now do I just delete the 4684? Quote Link to comment Share on other sites More sharing options...
jklcpa Posted April 2, 2022 Report Share Posted April 2, 2022 4 hours ago, joanmcq said: I found the election in ATX. Now do I just delete the 4684? Yes, you should delete that. The election is made by not reporting it and attaching a statement of details. Does the ATX statement include all of the required information as outlined on page 15 of Pub 547 under "How to Postpone A Gain"? If it helps, this is the statement I used for the last one I did that was for business assets: PostponedGainReducingCapitalizedCosts.pdf Quote Link to comment Share on other sites More sharing options...
joanmcq Posted April 2, 2022 Author Report Share Posted April 2, 2022 Yes, different format, but it has it all. 1 Quote Link to comment Share on other sites More sharing options...
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