Sold inherited oil mineral rights. FMV when inherited is known. Received 1099-MISC, box 7. Can I enter under investments? With a cost basis with a 1099-MISC

[forcelee]

Where/how would I enter in Turbotax so I can show the basis (FMV at death) and stay within tax code.

[Belling · Accepted solution]

The sale of mineral rights is treated as an investment sale.

How To Report using TurboTax Online Deluxe or higher:

Federal taxes<Wages & Income<"I'll Choose What I Work On" or "Jump to a Full List"<Investment Income<choose Start or Update across from the category for Stocks, Mutual Funds, Bonds, Other

You will be brought through a series of questions pertaining to the sale of this asset. You will be asked if you received a 1099-B form for the sale of this investment. Choose yes or no and then click Continue. When you are asked to select which type of investment you sold, you may simply choose, "Everything Else". Choose Continue and continue answering the questions about this sale. 

You will be able to enter the description of your property, how you acquired the property (inheritance), the date you inherited it, and the FMV on that date, as well as the date of sale and the FMV on this date. See my attached screenshots for reference. 

[forcelee]

thanks for your answer.  I feel confident in how to handle the sale in Turbo.  My only remaining question is about the 1099 MISC and the use of box 7 (non employee compensation).  If I show under investments will that be a red flag to IRS?  I thought the amount of sale should be in box 3 (other income) , or I would have received a 1099-B?  thanks for any additional help.

[Belling]

When you  sell mineral rights  it is treated as a long-term capital gains sale (IRC 1231) as long as it has been owned for more than one year. The sale should not have been reported in box 3, box 7 is the more appropriate place on the 1099-MISC, and regardless- when you enter this information into Turbotax in the Investment income area as I have outlined in my answer above, the amounts (whether in box 3 or box 7 of your 1099-MISC) will flow to your Schedule D as appropriate. You normally should receive a 1099-B for the sale of these mineral property rights. However, even if you did not receive the form 1099-B, you are still required to report the sale to the IRS.
For extra reassurance, feel free to read the IRS rules for 1099-MISC reporting, here: <a rel="nofollow" target="_blank" href="https://www.irs.gov/instructions/i1099misc/ar02.html#d0e613">https://www.irs.gov/instructions/i1099m...>

[forcelee]

Much appreciated, along with the link.