Land sale with 1099-S paid over 5 years

[Farles]

Hi TT Community!

I received a 1099-S for tax yr 2022 for a passive investment of vacant land made 10 years ago. The sale calls for payments to be made over the next 6 years. I am a UDI holder (tenant in common) so have no control over the terms, etc. The 1099-S I rec'd was for the whole $10,000 sale even though I have only received $1,200 in payment in 2022.

Questions:

- Should I enter this as an installment sale or a 1099-S?

- How is basis calculated? My cost around $7,000 + sales expenses? Plus estimated future expenses related to future payments?

- Do I have to report the whole sale as per 1099-S even though my gain will be greater than my payment rec'd?

Thanks a lot!!

[Critter-3 · Accepted solution]

Should I enter this as an installment sale or a 1099-S?   It is the same thing ... there is no place to enter a 1099-S sale ... you either enter the sale in full in the year of sale or spread it out using the installment sale form. Either way the interest paid will be reported on the Sch B each year it is paid.

- How is basis calculated? My cost around $7,000 + sales expenses? Plus estimated future expenses related to future payments?  Cost basis is original cost + costs to buy + costs to sell + any expenses IF  you made the election  to capitalize them  along the way AND reported that election on your tax return each year.   Not sure what expenses you could possibly have on future payments. 

- Do I have to report the whole sale as per 1099-S even though my gain will be greater than my payment rec'd?   Yes ... the entire sale is reported in the year it was sold HOWEVER you can use the installment sale form 6252 to spread out the income over the years you will get payments.  Complete the sale both ways and make the decision that is right for you. 

[Farles]

Thanks Critter 3, in my book you are Critter #1!!