4684 after Residential Rental Building fire.

[Nilesh Baxi]

Client's building burned in fire.  Residential rental property.  Fire occured on 10/01/2020. 

Cost:  $400,000

Depreciaiton:  $120,000 up to 09/30/2020

Insurance paid $635,000.  Assume no Salvage value.

Insurance payment was never cashed by client. It was cashed by bank and bank kept the money as client is rebuilding the property within two yeras as required by IRS.

So I stopped deprecition as of 10/01/2020.

Do I need to file form 4684?

Do I need to make any election for two year replacement option so client does not have to pay any taxes as long as the replacement cost is same or more than adjusted basis of building destoyed.