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View Full Version : Is the extra insurance payout money taxable?



talentedtb
10-08-2015, 05:08 PM
I own a small business and operate off land that I own. I had some storm damage to my large fabric style building that we lease to own. Insurance paid out $49k for materials + shipping and labor to get it fixed. They estimated X amount for materials and X about for labor. What they didn't know is that the company we bought the building from already owed us replacement materials for defective fabric so they shipped it all down on the same truck for free so the total cost was only ($4k to replace the part with storm damage). Since we built the building ourselves originally, we decided to use a portion of the insurance money to purchase a large used man lift ($14k) to use to repair the building and keep for future repairs and maintenance. There was further damage done while the roof was off that wasn't originally assessed by the claims guy. That maybe cost a couple of grand to fix. We also had to do some work to fix the lift ($2k) and of course we lost a bunch of business over the several months that the building was down.

So in the grand scheme of things, we used about half of the money for repairs and the other half to pay off business debts. So my question is.... do I have to pay taxes on a portion of the payout? Do I need to depreciate the lift or call it even? If I do need to pay taxes on it, is there a way to set it up to pay as little tax as possible on it?

Also... I do have a CPA that I work with but I wanted to get a general consensus so that I'm charged for as little time as possible.

Chris_Tax
03-13-2016, 02:22 PM
I like to keep it simple. I do not depreciate a car and keep receipts. I keep track of my business miles in a log and write off mileage. This may not always be the best way. I do Mom and Pop schedule C businesses