New to the site. Happy 3/15 everybody. I have an involuntary conversion issue that I can't seem to find the answer for.
Scenario: Client suffered property damage to an apartment complex from two separate natural disasters. Total estimated repairs are going to be around 2.4 million but they are only expecting to recover about 1.5 from insurance. They have already started the repairs but they were not completed bye TYE 12/31/2022. Based on the clients fixed asset register its hard to identify the damaged assets. My questions are how would you treat this? The issue I'm coming up against is how to record this for 2022. Do we just estimate the total involuntary conversion (including the assets that need to be disposed of) and disclose on the return, dispose of the assets and place the new assets in service at 12/31/2022? And next year we may have casualty gain/loss based on what insurance actually reimburses? Or just treat this as an ordinary disposal of assets and add new assets reduced by the insurance reimbursement? Any help would be appreciated.