If you get a 1099-S for the sale of a permanent
easement
- 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. (No
reporting requirement would be necessary in this instance. Just keep a
record of this transaction with your tax files.)
- 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:
- Once you are in your tax
return, click on the “Federal Taxes” tab ("Personal" tab in
TurboTax Home & Business)
- Next click on “Wages &
Income” ("Personal Income" in TurboTax Home & Business)
- Next click on “I’ll choose
what I work on”
- Scroll down the screen until
to come to the section “Investment Income”
- Choose “Stocks, Mutual Funds,
Bonds, Other” and select “start’ (or “update” is you have already worked
on this section)
- 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)
- Since you did not receive a
1099-B, answer “no” to the 1099-B question
- Choose type of investment you
sold - select everything else
- Some basic information:
- Description –
Address of property /easement
- Sales Proceeds – Your net
proceeds from the sale (usually reported on 1099-S)
- Date Sold – Date you sold
the property (on 1099-S)
- Tell us how you acquired the
property - Purchased
- 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.
- Date
acquired Original date the land was acquired.
