- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Get your taxes done using TurboTax
No, in this particular case a forced sale of your principal residence will not be treated a the sale of an investment and it will qualify for the gain exclusion on a principal residence..
Report the initial sale the Sale of Main Home interview found under Less Common Income (see attached screenshot).
Enter the 2020 Form 1099-S sale proceeds in this interview. For the 2020 adjusted cost basis, use your actual adjusted cost basis LESS the additional amount you expect to receive in 2021. The calculated gain is eligible for the exclusion available for principal residences.
When you receive the 2021 payment, enter it in the Investment Interview (see @ Colleen D3 post above), but with a basis equal to the payment - this will result in no investment gain for this additional payment.
Since you still own the land subject to the "bonus" payment, that will be reported separately. Based on your original purchase price for the entire parcel and any cost basis claimed in the "Sale of Main Home" steps, you should have remaining basis in the parcel (includes easement). Allocate an appropriate portion of that remaining basis to the 1099-MISC income, to reduce tax on that payment.