Should loss of income insurance check be accrued?

I have a client, accrual based C-Corp - that had extensive damage from Hurricane Laura and they have not been able to open as their store is still in the process of being rebuilt. They have a loss of income claim - but insurance hasn't paid a dime yet - my question is - do I have to accrue the loss of income into 2020 - at this point we really have no idea how much they are going to pay so the amount at this time cannot be determined. Hopefully they will start getting that income soon - but as far as the timing of it - does the portion that is for 2020 have to be accrued on the 2020 return if - on 12/31 the amount cannot be determined?

I think you've answered your own question: how can you accrue an amount that can't be determined?

Accruals should be fixed and determinable. You know you'll receive something, but don't know the amount. I vote 'no accrual'.

No accrual if not reasonably determinable.

When Matthew hit our area, it took about 7 months for the loss of use check to arrive to one of my clients. Was not accrued because while we knew what was submitted for loss amount, had zero idea of what the insurance would actually pay. They paid far less than submitted amount.

I think the amount should be sizeable & I just wanted to make sure I am doing this right. He should be ready to open in a month, and with the decrease in revenues from 4th qtr 2020 compared to 4 qtr 2019 he would qualify for the ERC in the 4th qtr and that would carry into the 1st qtr 2021 when he is open again. He has been paying his employees even though the business has been closed - so I would really like to be able to do this - but I just wanted to make sure because as I said - the numbers are fairly large figures (average profit, average sales, average payroll) I don't want to do something & he has to pay it back later if I was supposed to accrue it.

What if he receives the check or at least an amount before he files the tax return - would we have to accrue it even though we didn't know the amount at 12/31?

Curtis Electro Lighting case (1973) and FSA 200236003.

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