How do we determine the basis of individual lots purchased together for a single price that need to be treated individually when sold?

[cottagecharm11]

Just over a year ago we bought two lots for a combined total of $40,000. The verbal agreement with the seller was $19,000 for one and $21,000 for the other one that we are now selling. Our Realtor wrote it up for the total $40K price. All of the closing document list both lots and the $40K price with no price breakdown. We have a buyer for the 19K lot and we need to know how this will be treated for next years capital gains taxes.  When we tried to do a square foot calculation they came out at $28K and $12K. How do we determine the basis of the lots that need to be treated individually when being sold? 

[Mike9241 · Accepted solution]

basis for gain loss is what you paid for them.

if you have documents that showed a 19/21 split then that's what to use. 

since the agreement didn't specify a breakdown, your best course of action would be for a realtor to provide an estimate as to their values when bought.  

square footage may or may not be meaningful and we have no info about them. 

[cottagecharm11]

The Realtor estimate can be done easily with the agent we bought the lots through. One we have his estimate what do we do with it when we file our taxes next year, does it just get put in our file cabinet along with a copy of our taxes.

When we get the reporting form from the title company to report it to the sale to the IRS we are worried it will look like we took a big loss for selling a $19,000 lot for $40,000, unless the TT software has a built solution? 

Thanks for your help.

[cottagecharm11]

The Realtor estimate can be done easily with the agent we bought the lots through. Once we have his estimate what do we do with it? 

When we get the reporting form from the title company to report it to the sale to the IRS we are worried it will look like we took a big loss for selling a $19,000 lot for $40,000, unless the TT software has a built solution? 

Thanks for your help.

[fanfare]

"since the agreement didn't specify a breakdown, "

The agreement did specify a breakdown,

your basis in one lot is 19,000 and your basis in the other lot is 21,000.

When marking Box C or F on form 8949, enter the correct basis yourself.

 "we took a big loss for selling a $19,000 lot for $40,000,"

you seem to have your gain/loss calculation mixed up.

When marking Box C or F on form 8949, enter the correct proceeds yourself.

@cottagecharm11 

[cottagecharm11]

I noticed Form 8949 does not specify using the 1099S. Do I treat the 1099S as if it is a 1099B when filling out the form?

[Mike9241]

treat the 1099S as if it is a 1099B when filling out the form 8949

[fanfare]

Report your property sale exactly as you would have if you did not receive a 1099-S, but you are required to report even if your capital gain situation would otherwise exempt you from reporting.

@cottagecharm11