Hello,
I really appreciate your expertise in this article but have additional questions. I received a 1099-MISC form in 2020 with box-1 "Rents" checked. The payment was from our local electric utility company for an underground easement (in perpetuity); alongside our primary residence. We have owned this residence for 20+ years. The easement payment is less than the price we originally paid for our vacant lot / land (before building our home).
After I entered the 1099-MISC Rent payment amount, I selected "Rent or Royalty 1099-MISC Income" for the Schedule E; then TurboTax asks me to answer lots of questions about how I acquired the property, if it was a primary residence, etc. I just answered "none of the above" and entered "REDUCTION IN BASIS FOR EASEMENT" as you recommended under OTHER EXPENSES. That cancels out the amount of the 1099-MISC (and the tax affect). But I am not sure if needed to enter any other details such as what I originally paid for the property, etc? And what will happen next year for this Schedule-E. Do I delete it or ignore it for now?
I will be thrilled if this payment from our utility company does not generate a taxable event for the misc. income! Any additional details on how to proceed would be much appreciated! Thank you 🙂
