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No. of Recommendations: 3
1 Is filing Form 4684 Casualties and Thefts required in this case where the cost of restoration and insurance payments should net to zero?

Not in my opinion. Others may disagree. And the repairs equaling the insurance reimbursement has nothing to do with my answer. I would simply report the repairs net of any insurance reimbursement.

2 Is insurance compensation for lost rents included on Sch E, Line 3 with normal rental income?


3 Can the cost of the new plumbing stack, toilet flange and toilet be included on Sch E Line 14, Repairs?

I would. They are not extending the life of this business asset, they are allowing you to keep the asset in use for it's intended purpose.

4 Can the replacement of the rotting window, in the tub/shower area, be included on Line 14, Repairs?

Again, yes.

5 Carpet expenses above and beyond insurance coverage will be depreciated. Is the new vanity and faucet (~$150) included here as well?

I would include the vanity and faucet in repairs. I suspect they were ruined in the flood - well, at least the vanity. And once the vanity is out, it's silly to put the old faucet back in unless it was nearly new.

For a rental property, carpeting is normally depreciated over 5 years. So that's what I'd do with any amount the insurance did not cover.

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