Court Settlment on Investment Property

[chabsin]

I purchased a property in 2004.  Home was built in 2000; I purchased it from the original owner as an investment property.

There were some issues with the way the home was built. A suit against the builder was finally settled, and I received a check for several thousand.  

Is this taxable income? if so, how do I report it?

Or perhaps this just changes the basis of the property? If so, how do I report it?

Thanks in advance

[cparke3]

I think you need to review IRS publications on casualty losses and gains, court settlements and awards to answer this question.