Cheryl <cherylfdgm[at]yahoo.com> wrote:

- quote -

You should hire a local qualified professional to review
this for you. But, my quick-n-dirty "take" is as follows:

Assuming that you used this property as a personal residence
and that it was NOT destroyed in a federally declared
disaster (if either of those assumptions are incorrect, the
results might be different), I believe the house and the
land would be considered as a single asset for casualty loss
purposes, while the personal property would be considered
separately.

It looks like you paid $150 for the land plus $290 for the
house for a total of $440. You sold what was left after the
fire for $200. That gives us a potential casualty loss of
$240. (I am assuming that the total amount paid for the
property represented its fair market value BEFORE the fire,
and the sales proceeds for the land represented the value
AFTER.)

The insurance company paid you $275 for the real property
loss, thereby resulting in a "casualty gain" of $35 ($275 -
$240). You might be able to avoid this gain for tax purposes
by purchasing a suitable replacement property (consult with
a local professional for details).

The personal property would be considered separately.
Assuming that the insurance company paid you what was
arguably fair market value for the personal property at the
time of the fire, no gain or loss would result for tax
purposes on those items. I am guessing that the additional
amount paid for replaced items need not be considered a
"gain" because replacement property was actually purchased
(or, strictly speaking, the gain is "deferred"). But, I
haven't researched this particular point.

MTW

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Cheryl wrote:

- quote -

It sounds as if you may have a loss here. You only received
$275k for a $290k house + garage - but the garage is still
standing (is it worth ANYTHING as a stand-alone structure?)
- so that part seems to break even. The loss will probably
be on the contents of the home; a cost of $215k, but only
$135k received (it does NOT matter that you replaced a thing
for tax purposes), leaving $80k difference. The question
then becomes: Did the contents of the home devalue $80k
because they were used (before being destroyed).

The $50k gain on the sale of the land is a separate
transaction. I would venture to say that a casualty on a
primary residence is an "other, unforseen circumstance" that
will qualify for a proration for the IRC 121 exclusion on
sale IF this property qualifies as a primary residence
(which you didn't say). If it does, then there's no sale to
report.

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Cheryl <cherylfdgm[at]yahoo.com> wrote:

- quote -

Total cost is 150 + 290 + 215 = 655,000

- quote -

Insurance paid 260 + 15 + 120 + 15 = 420,000

Your starting point is the lower of the cost or the FMV
immediately before and after the loss.

Assume the value after the loss is your garage plus land.

Assume 150,000 for the land plus 30,000 for the garage
(adjust if garage is significantly different)

So value after the loss is 150 + 30 = 180,000.

So your loss is value before less value after less insurance
reimbursement

Value before loss = 655
Value after loss = 180
Ins reimburesement= 420

655 - 180 - 420 = 55,000

So off the top of my head your casualty loss of 55,000 is
your starting point. Subtract $100 from that. 54,900.
Whoppie.

Now subtract 10% of AGI.

Since we do not know your AGI but knowing you had over
600,000 tied up in the house, let;'s take a conservatice
120,000 AGI.

So 54,900 - 12,000 = 42,900 claimable casulaty loss.

Be careful about Alternate Minimum Tax.

But bottom line is you seem to have a claimable casulaty loss
here.

- quote -

See a local tax professional, which I am sure you will do
anyway. I calculated value after loss of 180,000 (see above)
and you sold it for 200,000 but there could be as much as
20,000 of wiggle room in there to come out with zero gain.
It doesn't help to come out with a loss because you have no
taxable income loss for personal property anyway.

- quote -

Casualty loss: Yes - see above.

If a Form 1099 was issued for the sale, then report it on
form 1040 schedule D, but it seems you have either a zero
gain or you can prorate up to 250,000 of gain (500,000 if
married/joint).

Example: If you really calculated a 20,000 gain, and you
lived there only 4 months before the fire, you can exclude
4/24 x 250,000 which reduces your gain to zero.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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Do these facts indicate a casualty loss AND in what Year
should it be reported - 2002 when the loss happened, or 2003
when I received the funds and could determine if I actually
had a loss or not?

In 2000 - I built a house. The land cost me $150,000.00.
The house (including detached carport) cost $290,000. I had
contents which cost me $215,000.

In 2002, the house burned to the ground (not the detached
garage, which was separately insured). Let's say the FMV of
the home was the same as my cost because it was relatively
new.

THe insurance company paid off my $260,000 mortgage and gave
me an additional $15,000 for the house. As for the
contents, we were paid $120,000 as a depreciated value and
then another $15,000 in replacement value for items we
replaced. We could have received more replacement value but
were not able to replace all items in the time limit.

We sold the land, including the carport, after the fire for
$200,000 in 2003.

Do I have a casualty loss here? Do I report that I sold my
house (considering I sold the carport, which was part of my
house?) If so, do I have a gain or loss on anything?
THanks so much.

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