Where should I enter income from a 1099-S if I was paid for a temporary easement (right-of-way) at my primary-residence property for overhead power-line repairs?

[Phillip1 · Accepted solution]

This will be reported as a capital gain transaction. In TurboTax, do the following:

1. When logged into your return, click on the Federal category in the left hand navigation bar on your screen.
2. Click on the Wages and Income tab at the top of your screen.
3. Find the section labeled Investment Income, and click start by the line labeled 
4. Go though the screens and answer no to questions about a financial institution and Form 1099-B.
5. Go to a screen labeled, "Choose the type of investment you sold" and choose Everything else.
6. On the screen labeled "Some Basic Info About This Sale" enter the information from your Form 1099-S.
7. Continue through screens answering questions until you get to a screen labeled "Enter Purchase Information".
8. Enter your cost basis information. 

You can claim some cost basis on the sale. Here are some notes on figuring the basis for an easement: 

• Easements are treated as a recovery of the basis of the property first, with any excess proceeds treated as capital gain, which is taxed at a lower rate than ordinary income.
• The basis of property that offsets an easement is limited to the basis of the affected acres or square footage. So (this is hard to explain) you will need to figure how much of your property (percentage) is effected by the power lines. Divide the effected area by the total area of the land, then multiply that amount by your basis in the land to get the cost basis in the easement section for the cell tower.