I received a 1099MISC for proceeds from selling an easement to a power company. This is not suppose to be taxed. How do I report this?
Payments for utility
easement sales do not get reported as income on your tax return. Instead,
the payment lowers your basis in the property. That only becomes
important later when you sell the land. The only time you report the
payment as income is when the payment exceeds your basis in the property.
Please follow this link for more information. https://www.irs.gov/publications/p544/ch01.html#en_US_2015_publink100072442
However, the buyer
has reported the sale to you (and the IRS) on Form 1099S. The IRS will
often send letters to the taxpayer in this situation and attempt to add the
sales price to your taxable income. If this happens to you, you'll need
to write back to the IRS and explain the payment was for a utility easement. Unfortunately, there is no way to report the sale on your tax return that could avoid this situation.