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jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3161
Experience:  I've prepared all types of taxes since 1987.
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Are business relocation payments taxable

Resolved Question:

Property is being acquired through an eminent domain action. As a part of the negotion, the owner has agreed to accept a certain value for the property. This amount includes relocation payments.
Submitted: 10 years ago.
Category: Tax
Expert:  jgordosea replied 10 years ago.

If the agreement does not separately state an amount being paid for relocation I would include the entire settlement as proceeds from the sale/condemnation when computing gain or loss. The business will deduct all of the ordinary and necessary costs of the relocation.

If the agreement does separately state an amount being paid for relocation I would not include that amount as proceeds from the sale/condemnation when computing gain or loss. The business will deduct all of the ordinary and necessary costs of the relocation less the portion specified for relocation remimbursement.

The net result is similar since the reimbursement either increases the gain or reduces the expense.

Hope this fully answers the question.

 

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