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'.
In TurboTax Online, 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 Miscellaneous income….
- Click to the right of Other reportable income.
- At the screen Other Taxable Income enter the description of the income.
- Click Add another Miscellaneous income Item.
You may print or view your full tax returns prior to filing after you have paid for the software.
- View the entries down the left side of the screen at Tax Tools.
- Select Print Center.
- Select Print, save or preview this year's return.
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.
Retain a record of the transaction with your tax return papers should a tax authority have a question at a later time.
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