Intellectual Property Law

Tax liability for settlement from stolen real estate property?

I have a plot of vacant land that was falsely sold as a result of identity theft. The title company is going to offer a cash settlement. At what rate will the cash I receive be taxed? Does it count as earned income? I had no intention of selling the property, in the first place, now I'm afraid of being taxed on the settlement. The property I owned was a gift from my parents for which I paid nothing. Thanks.

Public Comments

1. I would definatly contact a tax advisor for these questions. I know so much is a gift but this is an unusual situation. Take installments.
2. You may be able to avoid tax (or rather defer it to a later year) if you purchase another vacant lot with the proceeds. See IRS Publication 547 or a tax advisor.
3. Talk to your parents--just because it was a gift does not make the cost basis $0. Long term capital gains are taxed at 15% max.