Are settlements from inverse condemnation lawsuits taxable?

Are settlements from inverse condemnation lawsuits taxable?

by Susan E. S. Howe, CPA | Aug 23, 2019

Are settlements from inverse condemnation lawsuits taxable? 

It depends. The rules regarding taxable consequences of property seizure are complex, and involve understanding the tax basis of the property as well as the nature of the settlement proceeds. Consulting a CPA or tax attorney familiar with these types of transactions is advisable.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Susan E. S. Howe, CPA, is principal of Howe Advisory in Strafford, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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