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A person illegally cut trees on my farm and the person was…

A person illegally cut...

A person illegally cut trees on my farm and the person was convicted and was required to pay a restitution. Is this taxable and if so is a capital gain?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

The person cut hardwood and sold it a restitution of $47,000 was court ordered.

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Answered in 6 minutes by:
12/7/2017
Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,442
Experience: Certified Public Accountant
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Hi, my name is Mark. I will be happy to help you with your questions. Please give me a moment to prepare your response.

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What damages did you sustain? Is the $47,000 the amount you would have obtained if you sold the trees?

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Customer reply replied 8 months ago
that was the value of the trees but I had no intention of cutting or selling them.

How much damage did the farm sustain?

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I am assuming that this is not a tree farm?

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Customer reply replied 8 months ago
This was rural land, not a tree farm. A contractor trying to develop adjoining land was is the person having to pay the restitution.

If the payments merely restores your original value, it's not taxable, but if it enriches you beyond where you were before then it would be taxable (the amount of enrichment).

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Customer reply replied 8 months ago
Thank you.

It was my pleasure. I was happy to help. If this answered your questions I would appreciate if you would take a moment to rate my response. There should be stars locate above the question. If you have additional questions or need clarification I would be happy to continue the conversation. Thank you.

Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,442
Experience: Certified Public Accountant
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