All Posts

The payment you received for the easement is for you granting the right to the payor to use your property for certain uses such as a right-of-way for utility lines.  Those payments are not a "sale" but compensation for use of your property for their intended purposes.  The payment qualifies as a reduction in basis to your property and will not be taxable as long as the basis of the property is zero or greater.   As a simple example, let's say that you own a single family home on a residential lot that you bought for $100,000 - that would be the basis in your home.  If you received an easement payment of $10,000, that get's subtracted from the $100,000 basis to get your adjusted basis of $90,000.  Once you sell your property, you'll use this basis (along with other adjustments to it) to determine the gain on sale.   Here's how to enter the 1099-S in TurboTax online:   Click on Federal on the left side menu, then Income, then Wages and Income Summary. Scroll down to Investments and Savings and click on that section to expand it. Click on Start or Revisit for Stocks, Cryptocurrency, Mutual Funds, Bons, Other (1099-B, 1099-DA) Click Yes on Did you have investment income in 2025? Click Enter a different way on the next screen Click Type it in myself on the next screen Select the Other tile on the next screen Enter the name of the Financial institution on the 1099-S , then Continue On the Now, enter one sale for [financial institution] screen: The type of investment will be Land (personal use) How did you receive this investment? - select I purchased it For Description enter a description of the land sold for the easement Enter the date for when your purchased your home in the When did you receive this investment? Date sold or disposed will be the date you received the payment in 2025 Proceeds will be the amount of proceeds listed on the 1099-S Enter an amount equal to the proceeds in the Total amount paid box, then click Continue Click None of these apply, then Continue on the next screen This will get your 1099-S reported to the IRS on your return as a non-taxable event.  Just remember to adjust the cost basis of your home downward by the 1099-S proceeds for when you eventually do sell your home.

Hi baldietax-   Thanks for your fast reply.   My main concern was if that additional continuing statement page at end of return with the Schedule B interest adjustments detail would cause a failure of efile.  Because I have been told that we are not allowed to attach our own explanation sheets to a return for electronic filing, like PDF files.  If we need such explanation pages, the only way to file with them is by printing/attaching them physically to a paper return and mailing it to the IRS.   So when you say "sounds fine and normal", could you please confirm having that continuation statement at the end of the return will NOT cause a problem with efile?   Please advise.   Thanks!