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BCRW2
Returning Member

1099-S and 1099-MISC for Right-of-Way land question

I've had to sell part of my land in front of my house to the State government for a Right-of-way acquisition. Before the sale, I signed an agreement for them to have use of the land until the sale was completed for $3,000. I received a 1099-MISC for this, and in Box 1 for rent was $3,000. I entered this and it led me to entering a Schedule E and owing tax. Is this correct? 

 

Regarding the actual sale of the land for $1,500 I haven't received a 1099-S from the title company. I filled out an information form in the closing documents for it. Would I still need to report this sale on Form 8949 as if I received a 1099-S?

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2 Replies

1099-S and 1099-MISC for Right-of-Way land question

the $3k is rent for the right to use the land until the sale is final - schedule E and yes you will owe tax on it. 

the $1500 is an easement. Report the 1099-S amount as sale proceeds, then show the same amount as your basis, for a net gain of $0. On your own records, reduce your cost basis by that amount for future sale. 

 

BCRW2
Returning Member

1099-S and 1099-MISC for Right-of-Way land question

Would it be considered an easement when I don't retain any ownership of the section of land?

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