turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

ahbarr
New Member

Does it matter what the payment was for from a state buying my land to widen the highway?

Part was for the land, part for rebuilding a service road; are both payments capital gains?

Connect with an expert
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

1 Best answer

Accepted Solutions
Hal_Al
Level 15

Does it matter what the payment was for from a state buying my land to widen the highway?

Yes. It also matters what IRS form the state reports the income to you on. 1099-S, 1099-Misc or something else. Compensation for building the service road is known as “damages”. You don't report any of the payment, unless  you get an IRS form. You  reduce your cost basis in the remaining property, by the amount you received, for when the property is sold in the future


The damages is a direct reduction in your cost basis, for the future.

The sale of the land may have resulted in a capital gain. You have to figure out from your original cost what the basis in the sold portion was. I’m of the opinion that you can treat it all as a cost basis reduction, just like the damages

The IRS gets a copy of that 1099-S, so they expect to see it reported on your return. 

TurboTax does not have an entry point for a 1099-S (other than home sale). So, for option #1 In TurboTax (TT), enter at:
- Federal Taxes tab
 - Wages & Income
- “I’ll choose what I work on” Button
Scroll down to:
-Investment Income
   -Stocks, mutual funds, Bonds, Other (Real estate is other)

Just enter the same amount you received as your basis, for a net gain of zero

View solution in original post

3 Replies
Hal_Al
Level 15

Does it matter what the payment was for from a state buying my land to widen the highway?

Yes. It also matters what IRS form the state reports the income to you on. 1099-S, 1099-Misc or something else. Compensation for building the service road is known as “damages”. You don't report any of the payment, unless  you get an IRS form. You  reduce your cost basis in the remaining property, by the amount you received, for when the property is sold in the future


The damages is a direct reduction in your cost basis, for the future.

The sale of the land may have resulted in a capital gain. You have to figure out from your original cost what the basis in the sold portion was. I’m of the opinion that you can treat it all as a cost basis reduction, just like the damages

The IRS gets a copy of that 1099-S, so they expect to see it reported on your return. 

TurboTax does not have an entry point for a 1099-S (other than home sale). So, for option #1 In TurboTax (TT), enter at:
- Federal Taxes tab
 - Wages & Income
- “I’ll choose what I work on” Button
Scroll down to:
-Investment Income
   -Stocks, mutual funds, Bonds, Other (Real estate is other)

Just enter the same amount you received as your basis, for a net gain of zero

ahbarr
New Member

Does it matter what the payment was for from a state buying my land to widen the highway?

Thanks so much for your help!

Does it matter what the payment was for from a state buying my land to widen the highway?

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies