Did you sell a right of way easement? Do you still own the land and still pay property taxes on the land? Or was there an actual sale of the land and the new owner pays the property taxes on the land?
If you still own the land, the general treatment is that the payment is not income but reduces the basis in the land that you own. So, if you paid $10,000 for the land and received a right of way payment for $1,000, your new basis in the property is $9,000.
You still have to deal with the 1099 that was reported to the IRS. Report the income, then immediately report a minus entry for the same amount. Reference both entries as 'right of way sold - basis adjustment'.
Follow the steps below to report this income that is not reported as self-employment income.
- Down the left side of the screen, click Federal.
- Down the left side of the screen, click Wages & Income.
- Click the down arrow to the right of Less Common Income.
- Click to the right of Other miscellaneous income….
- Click to the right of Other reportable income.
- At the screen Any other Taxable Income, enter Yes.
- At the screen Other miscellaneous income summary, select Add.
- Enter the description of the income and the amount. Click Continue.
- Click Add for another Miscellaneous income Item.
View the entries at Tax Tools / Print Center / Print, save or preview this year's return / Include government and TurboTax worksheets.
The income will be listed on line 8z of the Schedule 1 Additional Income and Adjustments to Income and line 8 of the Federal 1040 tax return.
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