Condemnation Award

Condemnation Award

Condemnation Award may have one of the following meanings, depending the context of the term:

1. the money or value of other property received for condemned property.

2. the amount received from the sale of property under threat of condemnation.

If the taxpayer receives similar or related-use property, there is no taxable gain, and the basis of the new property is the same as that of the old property. The receipt of money or unlike property as reimbursement ordinarily results in a taxable gain. However, the gain can be postponed if the taxpayer purchases property similar or related in service or use to the condemned property or a controlling interest (at least 80%) in a corporation owning such property.

To postpone gain from a condemnation, replacement must be made as follows:

1. For a casualty or theft, the replacement period ends 2 years after the close of the tax year in which the gain is realized.

2. For a condemnation, the replacement period ends 2 years after the close of the tax year in which the gain is realized.

3. For real property used in a trade or business or for investment, the replacement period ends 3 years after the close of the tax year in which the gain is realized.


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