Yes. Compensation received through an eminent domain proceeding is subject to the same tax treatment as the proceeds of any other sale of real estate. It's unlikely their is a cost basis for the parcel you received the eminent domain proceeds. You can try to arrive at a cost basis by figuring out the land value and then dividing by acreage. The value of the land and buildings could be obtained from the Tax Assessors office for your county. Once the percentage is found for the land then use that on the total cost of the land portion of the property.
The entry will be a sale of Investment. Per the IRS instruction for holding period: Holding period. IRS Publication 544
- Long term: held more than one year (one year plus one day)
- Short term: held one year or less
- Open or continue your return (you can choose the Search box and type 'sale of second home' then use the Jump to link to enter your inherited sale) or follow the menu.
- Under Wages & Income scroll to Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)
- Answer Yes on the Did you sell any stocks, mutual funds, bonds, or other investments in 2021? screen
- If you have other sales on the Your investment sales summary screen, select Add More Sales
- On the OK, let's start with one investment type screen, select Other, then Continue
- On the Tell us more about this sale screen, enter the name of the person or institution that brokered the sale
- On the next screen, select Other, then continue to enter your sale.
An article that may be helpful is included also.
Please update here if you need further assistance.
@BMW82
[Edited: 02/27/2022 | 12:12p PST]
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