How do i handle a form 1099-s because the highway department took a corner of ou land and several trees resulting in an appraised depreciation?

[DS30 · Accepted solution]

If you get a 1099-S for the sale of a permanent easement

1. If the payment is less than the basis properly allocated to the part of your land affected by the right-of-way, reduce the basis of your land by the amount received.
2. If the payment is equal to or more than the basis of the affected part of your land, reduce the basis to zero and you will have a capital gain from a sale

Please refer to this IRS link for more information about the sale of your easement

Click this link for further information about reporting the sale of a capital asset

To enter this as a capital asset sale in TurboTax (for TurboTax Online sign-in, click Here), log into your tax return and type "investment income (gains and losses)" in the search bar then select "jump to investment income (gains and losses)". TurboTax will guide you in entering this information (see step 6 below) 

Alternatively, To enter this transaction in TurboTax Online or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Wages & Income” ("Personal Income" in TurboTax Home & Business)
3. Next click on “I’ll choose what I work on”
4. Scroll down the screen until to come to the section “Investment Income”
5. Choose “Stocks, Mutual Funds, Bonds, Other” and select “start’ (or “update” is you have already worked on this section)
6. The first screen will ask if you sold any investments during the current tax year (This includes any asset held as an investment property so answer “yes” to this question)
7. Since you did not receive a 1099-B, answer “no” to the 1099-B question
8. Choose type of investment you sold - select everything else
9. Some basic information:
1. Description – Address of property /easement
2. Sales Proceeds – Your net proceeds from the sale (usually reported on 1099-S)
3. Date Sold – Date you sold the property (on 1099-S)
10. Tell us how you acquired the property - Purchased
11. Enter the your cost basis- Original cost to you plus any capital improvements that you made to the land before the sale to the city.
12. Date acquired  Original date the land was acquired.