It depends. Do you also have a Form 1099-S for the sale of a land easement?
You normally do not report the income for granting an easement. You only reduce your cost basis in the property by the proceeds received.
However, because you received a Form 1099-S, the IRS will be looking for it on your tax return. Report the gross proceeds. but enter your cost basis as the proceeds, so that your taxable gain is 0.
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 'Everything Else' as the type of investment you sold
- Enter the remaining details for the sale your property.
If you are using your land to operate a farm, you can instead report the payment as Other farm income at the screen Your Farming Income and Expense.
Then, report an offsetting expense to zero out the income. Select Other miscellaneous expenses with a description such as 'right of way sold - basis adjustment'.
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