Question : Tax liability for settlement from stolen real estate property?
I have a plot of vacant land that was falsely sold as a result of identity theft. The title company is going to offer a cash settlement. At what rate will the cash I receive be taxed? Does it count as earned income? I had no intention of selling the property, in the first place, now I'm afraid of being taxed on the settlement. The property I owned was a gift from my parents for which I paid nothing. Thanks.
- asked by Mitchell O
All Answers:
Answer #1
I would definatly contact a tax advisor for thesequestions. I know so much is a gift but this is anunusual situation. Take installments.
- answered by Cheryl d
Answer #2
You may be able to avoid tax (or rather defer itto a later year) if you purchase another vacantlot with the proceeds. See IRS Publication 547 ora tax advisor.
- answered by Steve B
Answer #3
Talk to your parents--just because it was a giftdoes not make the cost basis $0.Long term capitalgains are taxed at 15% max.
- answered by v b
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