I'm looking for a tax expert's opinion on the following question:
In 2005, I spent $22,000 repairing the exterior walls of our house
which uses Dryvit's Stucco. According to the settlement of a class action
against Dryvit, Dryvit paid me $11,000, 50% of the total repair cost.
This week, IRS asked me to pay the tax on $11,000.
My reasoning was that Dryvit's payment is very much like the payment from a home insurance after a house was damaged by an accident and should be exempt from tax. Homeowners of Dryvit stucoo walls already suffered from damaged houses, depreciated values and repair costs, now IRS wanted to give another bite. If my reasoning is right, could you please give a reference on the case/code?
Thank you very much in advance.
In 2005, I spent $22,000 repairing the exterior walls of our house
which uses Dryvit's Stucco. According to the settlement of a class action
against Dryvit, Dryvit paid me $11,000, 50% of the total repair cost.
This week, IRS asked me to pay the tax on $11,000.
My reasoning was that Dryvit's payment is very much like the payment from a home insurance after a house was damaged by an accident and should be exempt from tax. Homeowners of Dryvit stucoo walls already suffered from damaged houses, depreciated values and repair costs, now IRS wanted to give another bite. If my reasoning is right, could you please give a reference on the case/code?
Thank you very much in advance.
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