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Roger
Roger, Lawyer
Category: Real Estate Law
Satisfied Customers: 31010
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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We live on a small lake built in 1950. In 2000 the developer

Customer Question

We live on a small lake built in 1950. In 2000 the developer gave the lake to the homeowners association and the deed says the purchase price was one dollar. In 2013 the homeowners association received a $300,000 settlement from the county because they were filling the lake with mud. The association had no basis in the lake and no idea what basis the developer may have had in the gift. Is the settlement taxable if we cannot use it within three years?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Roger replied 1 year ago.

Hi - my name is ***** ***** I'll be glad to assist.

Legal settlement awards received in non-personal injury lawsuits are generally taxable as ordinary income. That said, you should be able to reduce the tax liability by your expenses associated with the lake......such as the cost to build and maintain it over the years, etc. You could consult an account about that......but whatever amounts you can't deduct with write-offs would be taxable income.

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