If you have a gain on condemnation and you do not elect to postpone it, the way you report the gain on your tax return will depend on whether the condemned property was personal-use property or business property.
Personal-Use Property
If the condemned property was your main home, you can exclude gain of up to $250,000 ($500,000 if married filing jointly) if you qualify. Gains on other personal-use property are reported as capital gains on Schedule D. Losses on condemnations of personal-use property are not deductible. But, if you receive a Form 1099-S, Proceeds from Real Estate Transactions, you have to report the transaction on Schedule D even though the loss is not deductible.
Business Property
Gains or losses from condemnations of property held for business or profit are reported on Form 4797. Gains may have to be reported as ordinary income.