Sale of IRA held real estate.

[Retiredgranddad]

In 2005 I bought some vacant land using money from my traditional IRA for about $26,000.   We never used the land for any purpose.  We thought we would build there one day but never did.   Last year I had to sell it for $75000.   I am confused about how to report the sale.  I got a 1099-S showing $75,000 from the Abstract Company.   Transferors Name block shows the IRA management company and than "FOR THE BENEFIT OF" and my name and address.  The 9 digit filer TIN is shown.  I don't know if the TIN is for the abstract company or the company who managed my IRA.   Under Transferor's TIN is my SSN.   My proceeds were only $65,000 which I immediately rolled over into another traditional IRA.   All the fees and expenses of the sale came out of the IRA.  I assume since this was a roll over there are no capital gains?   So I do not file a Schedule D Capital Gains and Losses ?   I assume I hold onto the 1009-S for my records, but do not attach it to my tax return (1040)?  So is there anywhere in my tax return where I report this sale ?    If not it seems odd I do not need to report this sale or rollover somewhere, but I am new to all this.   I am worried that since the IRS has that 1099-S they audit me.  Very confused.  BTW I am 74 yrs old.   Thanks for your help.  

[AmyC]

I will answer your questions with a breakdown. The good, the bad and what you need to do for reporting on your return. The good:

• Thankfully, your form say For Benefit Of and is correct.
• You would not normally claim the sale since it was inside your IRA with no taxable gain to you.
• The company is required to send the 1099-S and they did.

The bad:

Since the 1099-S has your social security number on it, the IRS will notice. You can wait for them to send a letter or be proactive and clam the sale.

Reporting:

The sale:  I suggest you enter the 1099-S on sch D as sale of land under investments. Enter the $75,000 as proceeds and $75,000 as basis since it is NOT taxable to you. See Where do I enter investment sales?

The rollover: 

• Reported on 1040, line 4a - I am assuming the fees to sell the land and the land came out of the IRA
• Line 4b is zero and is a rollover.
• Enter this in the IRA section. See Where do I enter an IRA rollover?

Caution: The RMD- be sure you took the full RMD for all IRA accounts including the new value.