I actually have 2 questions..
I have a friend who's husband died a couple of years ago. He left her his Big Rig and she sold it for $20K. SHe also gained a house, however the family of her husband appealed the will in order to get the house. My friend filed a lawsuit and ended up giving the house to the family for $25k, are either one of these amounts taxable income? If so or not what form would she need to file?
Thanks

First the rig - if the $20K she received is more than her cost basis, then she would owe capital gains tax on the appreciation. Her cost basis is the fair market value of the rig as of the data of death of her husband - this assumes the rig was registered in his name, not jointly with her, so her ownership started when he died. She would report the gain on Schedule D of her Form 1040.

As for the house - again she only needs to worry if she has a gain (the $25K sales price is greater than the fair market value of the house on the husband's date of death). Also, even if she has a gain she may qualify for an exclusion on having to report the gain - for example if she has owned the home and it has been her principal residence for at least 2 out the previous 5 years. If she must report the sale, she uses Schedule D. More details on reporting the sale of a house, and the exclusions, are available in Pub 523:

Publication 523 (2007), Selling Your Home Ishe reports the gain on Schedule D.

It sounds to me that the husband was a long-haul trucker, which means it is likely that he was reporting his income using Schedule C as a sole proprietor.

That being the case, the Big Rig was being depreciated, probably over five-to-ten years, and that depreciation must be factored into the capital gains calculation.

I suspect that the sale will have to be filed on Form 4797 (Sale of Business Property) instead of Schedule D.

Regardless, this return is much too complicated for an amateur. The wife needs to get professional tax help pronto!