On Mar 18, 4:41*am, "removeps-gro...[at]yahoo.com" <removeps-
gro...[at]yahoo.com> wrote:

- quote -

The part of Section 121 that allows him to exclude the first $250,000
($500,000 on a joint return) of gain realized on the sale of a
qualified personal residence.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Seth wrote:
- quote -


Just to reiterate my previous reply, I also think it is part of the
sale, eligible for the exclusion if all other tests are passed.

-Mark Bole

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <ed3bf4de-2994-4924-8fdc-8e01b3d3c377[at]e25g2000prg.googlegroups.com> ,
removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:
- quote -

I think it's part of the sale.

Seth

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"removeps-groups[at]yahoo.com" <removeps-groups[at]yahoo.com> wrote:

- quote -

We don't know the nature of the judgment. But if it was for a reason
that resulted in the sale being for less than $100,000 than it should
have been, I'd think it would be allowed as gain from the sale of
property.

To my mind it's similar to an installment sale.

Stu

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Mar 14, 7:25 pm, Bill Brown <brow...[at]longwood.edu> wrote:

- quote -

Which part of section 121 allows him to treat this 100k received in
2007 as part of exclusion when he sold his house in 2004?

http://www.law.cornell.edu/uscode/26...1----000-.html

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Bill Brown wrote:
- quote -

Although I didn't state explicitly, in my reply I assumed the portion of
the settlement that was capital gain on the sale of the house would
also be excludable under Section 121, if all the other requirements had
been met at time of sale.

-Mark Bole

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Mar 13, 10:31*am, tomch...[at]gwi.net wrote:
- quote -


I say he has an additional $100,000 of gain excludible under Section
121. Since he has no taxable income, he has no deduction for legal
fees.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Mar 13, 11:11 am, Mark Bole <ma...[at]pacbell.net> wrote:
- quote -

Was the any personal injury? Amounts from personal injury are not
taxable (see http://www.irs.gov/pub/irs-pdf/p525.pdf and search for
"damages").

- quote -

You mean $33k other income, and $33k expenses on Schedule A (but only
amount over 2% of AGI deductible, subject to phaseout, subject to
AMT)?

- quote -

Would any exclusion apply? I think not, because this is a new
transaction. And if it is a capital gain, would it be taxable at
15%. That does seem a bit strange to me.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

tomchand[at]gwi.net wrote:
- quote -

I say, the amount received was ordinary income to the extent that it was
used to pay legal fees, reportable on Form 1040 line 21, and deductible
subject to 2% AGI on Schedule A.

The remainder of the settlement, not used to pay legal fees, is capital
gain from the sale of the house.

-Mark Bole

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

A couple of questions and a couple of posts.

Taxpayer sells personal residence in about 2004 or so, Married Filing
Joint, and uses about 200K of the 500K exclusion. There was a suit
pending related to contamination on the site.

3 years later, in 2007 he receives about $100K legal settlement on the
contamination suit.

The lawyers take 1/3.

Understandably, his position is: (1) This settlement is linked to the
sale of the residence, and that liability really existed at that time
and so should not be taxable. (2) The legal fees are to get what was
originally rightfully his, he was only "made whole" by the settlement,
so legal expenses should be 2% misc deductible as protection of
assets.

What say you?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >