Recording insurance proceeds

You can use AgExpert Analyst to correctly record insurance proceeds received from a claim on a capital asset, such as a vehicle or building.

Insurance proceeds are considered proceeds of disposition. Any insurance proceeds that you receive above the original purchase price of the capital asset are considered a taxable capital gain.

For example, imagine a bin on your property was recently struck by lightning and burned to the ground. You originally paid $5,000 for the bin and the insurance company has paid you $7,500. This $7,500 is considered proceeds of disposition on your bin.

To record this in AgExpert, select Transaction Entry from the Transactions menu. The Transaction Entry dialogue box opens. Enter your transaction as follows:

At year end, you’ll need to record the gain on sale of the asset. In the above scenario, you’d need to record a $2,500 capital gain.

Last updated on August 22, 2014 by FCC AgExpert