For You Tax Experts...

[lifeisgood]

Here's a little puzzler for you tax experts. I offered to help a relative with her taxes. She started a goat dairy farm this year. She bought a prize young animal for $1000. About a year later, she bought some feed supplement for this animal, which unfortunately poisoned and killed it. Very traumatic for both farmer and animal. The manufacturer eventually paid an out-of-court settlement of $9,000 to avoid publicity and replace the lost income from the animal.

Is the $9,000 taxable?

 

[Martha]

Harm to property is taxable to the extent the settlement exceeds the basis in the property. Lost profits are taxable.

See my signature.

 

[Texas Proud]

As Martha said.... look at her sig line for ME also

It is like she 'sold' them the animal. Now, if she had gotten them to say they were paying $1,000 for the animal and $8,000 for trauma... that is a different story (IIRC)...