You have an erroneous 1099-S. If you received an erroneous 1099, you have several choices (I would do #4):
- Ideally, you get a corrected 1099-S from the payer
- Don't report it on your return. Attach a copy of the 1099-S and a statement explaining the circumstances. You can't e-file. From the IRS instructions for form 1099-Misc: Form 1099-MISC incorrect? If this form is incorrect or has been issued in error, contact the payer. If you cannot get this form corrected, attach an explanation to your tax return and report your income correctly.
- Report the income as misc line 8z, Schedule 1 income Then enter a line 8z deduction, for the same amount. In TurboTax (TT), enter at:
- Federal Taxes tab
- Wages & Income
Scroll down to:
-Less Common Income
-Misc Income, 1099-A, 1099-C
- On the next screen, choose – Other reportable income - Answer yes to Any other Taxable Income -On the next screen, Enter the number. Briefly explain at description. Call it something like "Erroneously issued 1099-S". Then, enter it again except with a minus (-) in front of the number. Call it something like "Erroneous 1099-S adjustment"
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In TurboTax (TT), enter the 1099-S at:
- Federal Taxes tab
- Wages & Income
Scroll down to:)
-Investment Income
-Stocks, mutual funds, Bonds, Other (Real estate is other). Enter your cost basis as the same amount on the 1099-S; resulting in 0 gain or loss
- Do nothing and hope you can explain it away when & if the IRS contacts you
