chinese drywall

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  • oceanlovin'ea
    Senior Member
    • Jun 2005
    • 2682

    #1

    chinese drywall

    I have a theoretical question for you.

    The client bought a new house, unfortunately it was built with Chinese drywall. The builder's insurance has moved them into an apartment and is paying them $125 a day per diem to cover the duplicate household expenses. Is any of the payment taxable income? Would it make a difference if it was the homeowner's insurance?

    Thanks.

    Linda
  • solomon
    Senior Member
    • Aug 2006
    • 1012

    #2
    Originally posted by oceanlovin'ea
    I have a theoretical question for you.

    The client bought a new house, unfortunately it was built with Chinese drywall. The builder's insurance has moved them into an apartment and is paying them $125 a day per diem to cover the duplicate household expenses. Is any of the payment taxable income? Would it make a difference if it was the homeowner's insurance?

    Thanks.

    Linda
    The excess, (if any), of the per diem over the normal living expenses would be taxable and reported on Line 21 - regardless of whose insurance.

    Comment

    • Kram BergGold
      Senior Member
      • Jun 2006
      • 2112

      #3
      my opinion

      I had a client whose house burned down. The payments he received for living expenses were taxable. I would assume these payments are taxable as well.

      Comment

      • S T
        Senior Member
        • Jun 2005
        • 5053

        #4
        Pub 547

        See Pub 547 - Insurance payments for living expenses



        Sandy

        Comment

        • solomon
          Senior Member
          • Aug 2006
          • 1012

          #5
          If the casualty principles are applied, only the difference between the insurance reimbursement for living expenses and the increase in temporary living expenses over regular expenses before displacement is taxable.

          Comment

          • oceanlovin'ea
            Senior Member
            • Jun 2005
            • 2682

            #6
            Thanks

            Thanks. I appreciate your input. I will check out the reference too.

            Linda

            Comment

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