I sold a portion of my property to the County for utility improvement and I received a 1099S. How do I report that income?

[JamesG1]

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?

IRS form 1099-S Proceeds from Real Estate Transactions may report:

• Your main home, 
• A second home, 
• A vacation home, 
• Land,
• Residential rental property, or
• Real property recorded as a business asset.

The tax treatment of each of these transactions differ. Sale of a second home, an inherited home or land are considered investment sales.

In TurboTax Online Premier, follow these steps to report the sale:

1. Click on the Search magnifying glass and enter sale of second home.
2. Click on the Jump to sale of second home link.
3. Click on Add investments.
4. At the screen Let's import your tax info, click on Enter a different way.
5. At the screen OK, let's start with one investment type, select Other and click Continue.
6. At the screen Tell us more about this sale, enter the name.      Click Continue.
7. At the screen Now, enter one sale….., enter the information.      Click Continue.
8. At the screen Let us know if any of these situations apply to this sale, answer as appropriate.  Click Continue.

The entry will be reported:

• on Schedule D of the Federal 1040 tax return, and 
• on line 7 of the Federal 1040 tax return.

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.

1. Down the left side of the screen, click Federal.
2. Down the left side of the screen, click Wages & Income.
3. Click the down arrow to the right of Less Common Income.
4. Click to the right of Miscellaneous income….
5. Click to the right of Other reportable income.
6. At the screen Other Taxable Income enter the description of the income.
7. Click Add 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.