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How to handle a court award for damages and then the property is donated to city?

ritastone001
Level 5

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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8 Comments 8
sjrcpa
Level 15

He needs an appraisal to claim a charitable contribution deduction of $5,000 or more.


Ex-AllStar
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sjrcpa
Level 15

Did the damages come from the city? 

Was this an arranged we'll give you $25K and you give us the property?


Ex-AllStar
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BobKamman
Level 15

Is he a real estate developer?  Investment or inventory?

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BobKamman
Level 15

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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ritastone001
Level 5

No. City not involved in any way.

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ritastone001
Level 5

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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ritastone001
Level 5

No. Just happened to own the property since 2014.

 

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ritastone001
Level 5

Settlement was from 2 individuals who were working on a property below this one including dozer work into the hillside.

 

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