Here's how to report the 1099-S for the ROW Easement. The 1099-S is an informational form and is not reproduced in the tax return
The easement - Form 1099S:
Generally, you do not report the income for granting an easement. You reduce your cost basis in the property by the proceeds received
Report the gross proceeds from the 1099-S, and then enter your cost basis as the proceeds (the same amount from the 1099-S). Then your taxable gain is 0.
But because you got a 1099-S, the IRS will be looking for it on your tax return.
- Enter the 1099-S proceeds as follows:
- Go to Federal Taxes.
- Wages and Income.
- Investment Income.
- Stocks, Mutual Funds, Bonds, Other.
- Click on either Start or Update.
- Answer NO to Did you get a 1099-B or a brokerage statement for these sales?
- Choose 'Land' as the type of investment you sold.
- Enter the remaining details for the sale your property and continue through the onscreen questions until you get to the 'Enter Cost Information' screen.
- Click the attachment to enlarge and view
Remember to reduce the basis by the amount of the right-of-way payment only. This basis will be used when you sell the property.
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