Property damaged by fire, are unused insurance proceeds taxable? Tax implications for keeping vs. selling property?

[William Petrisko]

I have a fourplex that was damaged by fire, thankfully no one was hurt.

For ease of the example, let's assume the following numbers:

Property was purchased for $150k. Insurance check I will get is $80k.

What are the tax implications of each of these scenarios?

1) I sell the property as-is to another investor for $100k, and pocket the $80k insurance check. Can I take a loss from the sale of the property ($150k basis - $100k sale price = $50k loss)? How would the $80k insurance check be taxed? Or would the basis of the property be offset by the insurance proceeds?

2) I do general fire remediation on the property (spend $30k), then sell to another investor for $120k. Same question as above.

3) I do a complete rehab for $60k, then pocket the remaining $20k left over from the insurance check.

Basically, I am trying to figure out the best exit strategy for tax purposes.

I have a call in to my CPA as well, but thought hopefully someone else who has experienced any of the above scenarios might offer some advice on how they handled it.

thanks

bill