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Insurance proceeds fire rental

Technical topics regarding tax preparation.
#1
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22-Apr-2014 12:02am
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Lower 48
Client had a trailer on a lake that was rented on an annual basis. Fully depreciated. Fire occurs in late November 2021 and clients get a $25,000 check from the insurance company in 2021. The direct cleanup incurred in 2022 at a cost of $15,000 incurred and was paid in 2022. They are not going to reinvest.

Is this a gain of $10,000 in 2021 or a gain of $25,000 in 2021 followed by a loss of $15,000 in 2022?
 

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