My wife and I are Indian citizens with US permanent residency. My wife owns an apartment in India. The building that the apartment is in, is being redeveloped by a builder. Duirng the redevelopment project, my wife does not have access to that apartment. Therefore, the builder is required to pay her monthly compensation to cover her cost of an alternate residence during the project. The Indian government has ruled that such compensation payments are capital receipts and are not taxable in India, irrespective of whether the money is actually used for rent or any other purposes. Would the US tax code consider these payments as capital receipts or regular income? If they are capital receipts, how should we handle them in Turbo Tax while paying US taxes? Thank you.
