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Client was awarded damages of $25K for a small property. His basis is $8000. After this settlement he donated the property to the city. The PVA's office value listed is $25000.
Am I right thinking that 25K-8K = 17K to report as income?
Would his donation deduction then be the 17K taxed?
The actual damage to the property caused sliding of the hillside underneath the property.
Any help to make sure I am doing both of these entries correctly will be greatly appreciated.
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He needs an appraisal to claim a charitable contribution deduction of $5,000 or more.
The more I know the more I don’t know.
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Did the damages come from the city?
Was this an arranged we'll give you $25K and you give us the property?
The more I know the more I don’t know.
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Is he a real estate developer? Investment or inventory?
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If it was a court award I don't think a judge would have been helping the city make a deal. On the other hand, if it was a condemnation lawsuit, the owner might have agreed not to contest the valuation if the city agreed to take it off his hands.
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No. City not involved in any way.
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Local PVA's office values it at $25000 before he gave it to the city. And after the settlement. I am told. I do not have anything verifying this. I told him he would need an evaluation of the value.
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No. Just happened to own the property since 2014.
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Settlement was from 2 individuals who were working on a property below this one including dozer work into the hillside.
