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fitzco1
New Member

Duke Electric paid $30000. for right- a way to put a line across my farm property. A 1099 has not been issued so do I have to declare this as income.

 
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JohnW15
Intuit Alumni

Duke Electric paid $30000. for right- a way to put a line across my farm property. A 1099 has not been issued so do I have to declare this as income.

Maybe, but it depends.

Amounts received for granting easements aren't generally reported as income on your tax return. Rather, the payment lowers your basis in the property, and that only becomes important later, if and when you sell the land. 

The only time you'd report the payment as income is when the payment exceeds your basis in the property. 

Please see "Easements" on page 3 of IRS Publication 544, Sales and Other Disposition of Assets for more information.  (Note:  This is the 2016 version of this publication; the 2017 version is no longer available, and the 2018 hasn't been issued yet, but the relevant information is still valid.) 


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2 Replies
JohnW15
Intuit Alumni

Duke Electric paid $30000. for right- a way to put a line across my farm property. A 1099 has not been issued so do I have to declare this as income.

Maybe, but it depends.

Amounts received for granting easements aren't generally reported as income on your tax return. Rather, the payment lowers your basis in the property, and that only becomes important later, if and when you sell the land. 

The only time you'd report the payment as income is when the payment exceeds your basis in the property. 

Please see "Easements" on page 3 of IRS Publication 544, Sales and Other Disposition of Assets for more information.  (Note:  This is the 2016 version of this publication; the 2017 version is no longer available, and the 2018 hasn't been issued yet, but the relevant information is still valid.) 


Hal_Al
Level 15

Duke Electric paid $30000. for right- a way to put a line across my farm property. A 1099 has not been issued so do I have to declare this as income.

You don't report any of it. You  reduce your cost basis in the remaining property, by the amount you received, for when the property is sold in the future.

Reference: https://ttlc.intuit.com/questions/4377020-received-a-1099-s-for-a-pipeline-running-through-our-prope...

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