<prompt> Human: Hi everyone,My familys home was severely damaged after the water main in the street cracked. It caused sinkholes on our property causing the front of our house to sink and damage the foundation. Anyway, we couldnt live in our house anymore and had to rebuild it. For years, we have been in a lawsuit with the water company and its looking more and more like we will receive a nice settlement. With that said, we have no idea what our tax liability will be. Does anyone know how we will be taxed?Follow-up question: Does anyone have a good ideas to do with the money to reduce the tax liability?Thanks!  <response>: You need to talk to your lawyer andor a tax lawyer about this. Tax treatment of settlements is quite complicated. 