Recording positive equity from auto insurance claim payment

I'll help you track the payment, rachael_.

Yes, the payment is not income. We'll have to enter it as a deposit instead. Before proceeding, let’s create an account to track the entry:

1. Go to the Lists menu, then select Chart of Accounts.
2. From the Account drop-down, click New.
3. Select an account type, then select Continue.
4. Complete the account details.
5. Click Save & Close.

For more details, see this article: Add Account in QuickBooks Desktop.

I also recommend consulting an accountant to ensure the payment is recorded accurately.

Once done, we can now create a bank deposit:

1. From the Banking menu, select Make Deposits.
2. Close (X) the Payments to Deposit window.
3. In the Make Deposits window, select the correct accounts.
4. Add the payment to the Amount field.
5. Enter the other necessary details.
6. Once done, click Save & Close.

Additionally, I've added these articles that'll help match your accounts to your real-life bank and credit card statements:

• Reconcile an Account in QuickBooks
• Fix Issues When Reconciling in QuickBooks

Please stay in touch with us if you need additional assistance recording the transaction. We want to make sure your books are accurate.

@rachael_ 

Insurance proceeds from property losses are gains to the extent they exceed the adjusted basis in the property.  So, yes, it is income (gain). However, the outstanding loan amount is irrelevant for determining gain.  What matters is the original cost of the vehicle and any depreciation taken prior to the accident.  To determine your gain, take the insurance proceeds ($32K) and subtract your basis (original cost less depreciation taken).  So, for example, if you paid $40K for the vehicle and depreciated it down to $30K ($10K in accumulated depreciation), you will have $2K in gain from the insurance proceeds [$32K - ($40K-$10K)].