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I received a restitution check from GM after signing a release of claim document. I this income going to be taxable?
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I received a restitution check from GM after signing a release of claim document. I this income going to be taxable?
the way I would look at this situation is you traded in the car and got $X in trade-in value. then GM made restitution which i would regard as part of the trade in price because the defect lower its trade-in value.
now you have to look at the tax basis of the vehicle - purchase price less deprecation if any. if the trade in value including the GM money exceeds your basis you have taxable income first deprecation recapture up to the amount taken any excess is capital gain. if it was purely personal then any loss is not deductible but any gain is taxable - long-term capital gain if you owned the vehicle more than 12 months.
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I received a restitution check from GM after signing a release of claim document. I this income going to be taxable?
Thanks for the feedback, helps clarifies things for me. Especially after owning the car for almost 2 years.
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