Previous post last year for context: https://ttlc.intuit.com/community/tax-credits-deductions/discussion/is-a-lawsuit-settlement-taxable-in-this-instance-dealing-with-a-real-estate-investment/01/369383#M46366
I took a lost in 2019 related to a Real Estate Investment so I have a large capital loss carry forward. As a result of a lawsuit, I've reached a settlement and payments commenced in 2020. I'm assuming this should go against my capital loss, but I wasn't sure where to enter it to get that effect as this isn't really income but more a recovery of my investment. Any help would be appreciated! Thank you!!
It appears you already sold the real estate investment at a loss, and the answer will reflect that fact since you have a capital loss carryforward.
It would seem the settlement received would be like additional sales proceeds from the property which you must determine based on the document descriptions for the settlement award. If you find that to be the case, then you should report the settlement as a sale with the settlement as the sales price and zero as the cost basis. This would then be used to offset your capital loss carryforward.
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