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A commercial rental tenant moved out 18 months before lease

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A commercial rental tenant moved out 18 months before lease expired. When pursued they paid up the entire amount as a private settlement. Is that settlement taxable as a capital gain or regular income?



Welcome to Just Answer,


The underlying activity of this dispute on which the settlement was awarded would have flown through as regular income. So you were correct to treat the settlement as regular income and not capital gains. If the ex tenant paid the remaining 18months without the settlement that would have been regular income so the treatment should be the same.


Please let me know if you need any clarification.

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