First let's determine if the easement income is taxable. Next, if you decide it is taxable, this might be a 'right of way' payment. If so then you should follow the steps below with details.
- Grants or sales of limited easements are usually not treated as taxable sales of property. Instead, amounts received are subtracted from the cost basis/purchase price of the property. Any amounts received in excess of the cost basis are treated as taxable gain.
- IRS Publication 544
If you no longer own the portion of land where you were granted an easement payment:
To enter your sale in TurboTax, follow these steps.
- Open or continue your return.
- Navigate to the investment sales section:
- TurboTax Online/Mobile: Go to investment sales. If using this application, make sure it is open
- TurboTax Desktop: Search for investment sales and then select the Jump to link.
- Or Personal Tab > Continue > I'll choose what I work on > Scroll to Investment Income > Select Stocks, Cryptocurrency, Mutual Funds, Bonds, Other
- Answer Yes to the question Did you sell any of these investments in 2024?
- If you land on the Investment sales summary or Your investments and savings screen, select Add More Sales or Add investments.
- Click this link for more information. Where do I enter Investment Sales?
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