<prompt> Human: Hi reddit world. I live in SF and if you havent heard, we have a housing crisis here. Rents and housing prices have gone through the roof. The house Ive been renting for a few years was sold recently. The new owners offered me a buyout to leave my lease. Tenants rights in this city are incredible so sometimes landlords will buy tenants out of their lease so they dont have any restrictions on the property. Basically, I will be receiving around 40,000. I wonder if you have any advice about the following: What are the tax implications of this? Does it count as regular income, subject to my regular tax rate? Will I owe taxes immediately on that income or can I wait until next April? Is there a way to reduce my tax burden? Is there any amount that wouldnt be taxed if the payout were smaller?I am self-employed and my income is currently only around 28,000 per year and dont have much in savings.ThanksEDITUPDATEThanks for everyone for the discussion. For anyone looking this up later, here is some info that might help. Ive talked to multiple attorneys and tax consultants. Ive heard contradictory information from them all. Attorneys were more in favor of capital gains than CPAs but those CPAs had not seen this. I did find a CPA familiar with buyouts as capital gains. My understanding is that it is still a gray area. However, the bigger consensus is that I can declare it as a capital gain via tax code 1241 see link for related rulecases and Rev Rul 56-531. It will also be easier if I can get the payees to issue me a 1099B or none at all instead of a regular 1099. Ive also been told that the IRS has three years to refute my claim so if I just save the difference for three years, incase I need to pay later, I should be OK. Thanks!  <response>: Hmm. Do you have another spot lined up to live in? This could be a pretty dangerous move if you dont have a new place, theyre all crazy expensive these days. 