E. Differentiation of Property and Income


State regulations define payments that include compensation for converted property as those payments received from insurance companies, settlements, court judgments, or other similar sources which wholly or partially compensate for property which has been lost, stolen, damaged, or destroyed.

Treatment of Payments from conversion Of Property

The proper treatment of these payments is made by determining the proportion of the payment attribute to the property conversion, that portion is property. The remainder is treated as income. This is done by subtracting from the total amount of the payment, the value of the converted property at the time it was lost, stolen, damaged, or destroyed.

Determination Of Value for Conversion Of Property

The value of the property is the largest of the following amounts:


           The value specified by the issuing source (insurance claim, specified verdict, etc.);

           The value assigned to the property at the renewal prior to its destruction;

           The value that would have been assigned to the property under current regulations; or

           Any other evidence substantiating the value of the property at the time it was destroyed.