Eminent domain and "hurt"?

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Subject Author Date Eminent domain and "hurt"? AES 08-14-2009  Re: Eminent domain and "hurt"? Alan 08-14-2009  Re: Eminent domain and "hurt"? AES 08-14-2009
Posted by AES on August 14, 2009, 1:09 pm Please log in for more thread options Seems to me I once read of a situation in which a group of individuals in a certain area whose residences were taken by a government body using eminent domain were paid the current fair market value of their properties (assessed as if the eminent domain situation were not present), plus a bonus amount (10% or 15% of the FMV) which was called the "hurt" and intended to compensate for the involuntary nature of the sale. Would this hurt then be considered a capital gain? Or some other form of income? [And can anyone point me to any references when extra compensation equivalent to this "hurt" has been paid or discussed in eminent domain cases, or where the term itself is used in this sense? I've been Googling on the term and the concept, and not coming up with much.] -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Alan on August 14, 2009, 2:33 pm Please log in for more thread options AES wrote: > Seems to me I once read of a situation in which a group of individuals > in a certain area whose residences were taken by a government body using > eminent domain were paid the current fair market value of their > properties (assessed as if the eminent domain situation were not > present), plus a bonus amount (10% or 15% of the FMV) which was called > the "hurt" and intended to compensate for the involuntary nature of the > sale. > > Would this hurt then be considered a capital gain? Or some other form > of income? > > [And can anyone point me to any references when extra compensation > equivalent to this "hurt" has been paid or discussed in eminent domain > cases, or where the term itself is used in this sense? I've been > Googling on the term and the concept, and not coming up with much.] > I don't know about "hurt", but there is a federal law that dictates what must be paid and how much can be paid by a federal agency when the feds take property or when a state takes property that involves federal funding. Many states have laws that are similar to this Act. The following article (written after the USSC decision in Kelo) from the Michigan Law Review summarizes the Uniform Relocation Assistance and Real Property Acquisition Act of 1971 (See Title 42 Chapter 61 of the US Code for the text) and discusses the whole issue of taking property by eminent domain. The act itself states that the relocation assistance and related items are not taxable income. Any other excess that relates to the purchase price (e.g., an amount to cover replacement cost) would be treated as capital gain if disposed of at a gain. http://www.michiganlawreview.org/archive/105/1/garnett.pdf -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by AES on August 14, 2009, 6:32 pm Please log in for more thread options > > The following article (written after the USSC decision in Kelo) > from the Michigan Law Review summarizes the Uniform Relocation > Assistance and Real Property Acquisition Act of 1971 (See Title > 42 Chapter 61 of the US Code for the text) and discusses the > whole issue of taking property by eminent domain. > > http://www.michiganlawreview.org/archive/105/1/garnett.pdf Thanks! -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >>