Where do I enter sales expenses for the sale of gifted land in the investment section? "If the 1099S doesn't have have fees subtracted, enter them in sales expenses."

[ColeenD3]

Sale of land gets reported in TurboTax as a sale of an investment.

Please follow the following steps to record the sale in TurboTax:

• Within your return, select Federal Taxes tab
• Select Wages & Income tab
• On "Your income" page, click Start button for Stocks, Mutual Funds, Bonds, Other
• On "Did you sell any investments in 2019?", click on Yes button
• On next page, answer whether or not you received a 1099-B or a brokerage statement for the sale
• On next page, "Choose the type of investment you sold", select radio button for Land and click on Continue button
• Enter the details of your land sale on the next page, "Enter Land Sale Information" and click on Continue button
• On next page, select radio button for the way in which you acquired the land and click on Continue button
• On next page, "Any Business or Rental Use?", indicate how you used the land and click on Continue button
• On next page, "Enter Cost Information", enter Date Acquired and Original Cost and click on Continue button
• If there is no specific place of entry for the Sales Expense, add them to the basis of the property.
• TurboTax will then calculate your gain on the investment in land, indicate whether it's short- or long-term, and indicate your Proceeds and Cost Basis

Your basis in the land is the Fair Market Value on the date of death.

[na-ken]

Follow-up to your answer about the sale of gifted land.

Using 2019 Business TurboTax.  Similar... Sold land with 16 undivided interest owners.  Each owner has a different cost basis, that is not in accordance with % ownership, profit, or loss.  I have the cost basis for each of the 16 undivided owners, but unable to determine how/where to enter the cost basis for each person.

Thanks,

Ken

[KristinaK · Accepted solution]

If you are preparing a partnership return (Form 1065), then you will need to do allocations on the partner's level. Allocations are not allowed for S Corp tax returns.

Here is how to do it. 

1) Record the sale of the entire lot on Schedule D. The total gain will flow to Form 1065, page 4, line 9a (assuming Long-term gain). 

2) In Forms mode, find Schedule K-1 Wks for each partner. 

3) In the area of Special allocation either enter the percentage of what is being allocated to this specific partner under By Ratio. Or an actual dollar amount allocated to the partner under By Amount.

4) Do it for each partner. 

5) Return to Form 1065, page 4, line 9a, and enter either 1 (for the ratio) or A (for amount). This can actually be done before step 3. As long as you know whether you are going with Ratio or Amount and what line you are selecting. 

6) This will flow to the partner's Schedule K-1, line 9a. Who will, in turn, report it on their individual tax return. 

See screenshots below demonstrate a long-term gain of $60,000, with a 5% allocation to one of the partners. 

Form 1065, page 4.

Sch K-1 Wks

Schedule K-1 (each partner) 

[jimb108]

I sold a vacant lot in 2020. After clicking Yes to "Did you sell any investments in 2020?" and No to "Did you get a 1099B....." I am presented with "Tell us about this sale". It is referencing brokerage sales  There is no place to select the type of sale, e.g. Land.  How do I get to that screen? Please advise.

[jimb108]

Forgot to mention, i am using TT Premier

[DawnC]

Are you using the desktop or online Premier?    You need the same information (sales price, basis, and holding period) you would need if it were a brokerage sale, so the screens are very similar.  @jimb108

[jimb108]

Thanks. I am using Desktop TT Premier.  I chose the entered my Gross Proceeds $36, 00. I don't know the cost basis so for now I entered $20,000 for now.  I entered Long Term since I have been part owner for many years.  At no point did I have to choice of selecting LAND.   It refers to it as a Financial Institution.

SO my main question is: How can I get to the spot where I can identify this as a land sale?

Secondly, how can I determine cost basis if Town (out of state)  records don't go that far back?  Can I include closing costs in the cost basis or report them as expenses? If yes, where do I input?

[ToddL99]

The sale of vacant land (and a host of other investments) is reported in the Stocks, Mutual Funds, Bonds and Other interview of Investment Income. It is the sale of an investment NOT reported on Form 1099-B. See the two screenshots below to see what these screens look like,

Your cost basis is either what you paid for the property or, if gifted to you, what the donor paid for the property. If you inherited the property, your cost basis would be the FMV of the property on the date of the previous owner's passing. If you don't have that information you would have to make a good-faith effort to determine the basis - if the local tax authority doesn't have any records, checking with a local realtor can sometimes help

 Closing costs are reported as expenses.

[jimb108]

Thanks Todd, this great. I was under the impression there was an opportunity to actually indicate land sale but if not, that's ok. Here are more details on our situation which make cost basis so hard to determine.

Any advice on how to determine cost basis would be very much appreciated.

My wife's aunt purchased land in FL in 1974 - price unknown

My wife's aunt put my wife on the warranty deed as joint tenant in 1992.

When her aunt died in 2004 we thought my wife was the sole owner.  Fast forward to 2020 when my wife went to sell she found she was only 50% owner, turns out there was no Survivorship Rights.  My wife did a 'Quiet Title' action where the other 10 heirs waived their rights to the property, knowing their aunt's intention to give it to my wife. It sold for in December, gross proceeds $36,500.

Local valuation records for 2004, when the aunt died, show value at $20,000

Land value at time my wife was put on the deed in 1992 is unknown.

Closing costs including lawyer were $2500.

my wife paid taxes on the property from 2004 through 2020. (~$6500)

Help!?

[DavidD66]

There is place where you indicate what type of asset you are selling and one of the choices is Land.

There are two components to your basis: 50% is the value when your wife's aunt died - 1/2 of $20,000 or $10,000.  The other half is what your wife paid for the property in 1974.  There are property records that will show that amount.  You should contact the county tax commissioner's office where the property is located.  

If the property was held as an investment, as opposed to personal use property, then you can add the $6,500 to your basis.  If you were to use a cost basis of zero for the unknown part of the cost basis, your basis would be $16,500.  The $2,500 in closing costs would be a reduction in proceeds.  So now you have:

Sales Proceeds - $34,000

Cost Basis - $16,500

Long Term Gain - 17,500

I'm not recommending you use zero for 50% of the basis, I would research the real basis or come up with a reasonable estimate.   

[jimb108]

Thank you for your response. It was my wife’s aunt who purchased the property in 1974.  She generously added my wife as joint tenant in 1992 at no cost.  The aunt passed in 2004.

Can we add 50% of what her aunt originally paid for the property in 1974, $2800.  The property was not used for personal use and remained in both names from 1992 to 2004 when her aunt passed. Does that change anything? I assume we can add the $6500 in taxes paid over the years 2004-2020 to the basis. Is that right?

Where do I find the place in TT Premier (desktop) where it gives me the choice to indicate this was a land sale.  I cannot find it.  When I click Yes to "Did you sell any investments in 2020?" and No to "Did you get a 1099B....." I am presented with "Tell us about this sale".  I don’t see a place to select the type of sale, e.g. Land.  How do I get to that screen?

[ToddL99]

The cost basis for the property would be the full amount the aunt paid for it 1974; when she addied your wife as a joint tenant, she was making a gift and your wife's basis would have been what the aunt paid for the property.

You cannot include any property taxes paid over the years as part of the cost basis. 

There is no special way or place to enter the sale of land in TurboTax. It is the sale of Stocks, Mutual Funds Bonds and Other ("Other" includes land). 

See the attached screenshot to show how this would look: