Ask TaxMama.Com Tax Information With A Mother's Touch Published by Eva Rosenberg, MBA, EA Volume 6, Issue 255        April 16, 2004

Things to Do or  Know in April Perspective On Taxes Settled Lawsuit Servicing Satellites Haven't Filed Taxes For Ten Years Following My Wife   IRS Tax Tip - Appeal Rights   The Heir Apparent   E-Mail  This Page To A Friend Your email: Your name: TO email:

Settled Lawsuit » From: Grosse Point, MI Dear TaxMama: I had a rental property that I transfered to an individual to settle a lawsuit. I had owned this property for 5 years, and the person to whom I transfered it was not originally an owner of any sort. Do I owe recapture or capital gains taxes on this transfered property? Steve Dear Steve, Two things happened when you did that transaction. You sold the property. You paid a bill (settlement). So, your entries, or tax effects come in two parts. Treat the transfer as a sale of the property. The sales price is the judgment amount of the lawsuit. Then, you also have the amount of the judgment you might be able to use as a business expense. Discuss with your tax professional what the judgement was about. If it was business related, you might be able to pick that up as a deduction somewhere. If it was related to the rental property, it might be a Schedule E expense. However, if it was strictly personal or punitive damages were specified by the court, you won't be able to use the 'cost' as a deduction anywhere. Best wishes, Eva Rosenberg Your TaxMama

TaxMama's Other Sites TaxMama's Secrets The Help Desk PhotoMasterpieces I-Laugh

Library of Congress -  ISSN 1532-0790 Copyright © 2000-2007 - Eva Rosenberg

Subscribe | Ask TaxMama ~ Send Her Your Questions | Site Search Home | This Week's Issue | Articles by TaxMama | For Tax Pros Investment Secrets | IRS News | Smart Tax Moves | Critical Dates Using Money Wisely | Money Funnies & Inspiration | Because We Care About TaxMama | Our Privacy Policy | Legalese and Disclaimer | Press Page

Site design by Serenata Design.