Sold permanent easement with NC department of transportation

[dallasjh89]

Hello!

NC DOT compensated me for a section of land. I received a 1099-S in the amount of $9475.00. I see where to put this in under "Investments and Savings" but it never asks me the question "did you receive a 1099-B?" I went through all the steps including on clicking "Other" when asking the investment type. Once its all in and confirmed it shows up as a 1099-B entry and not a 1099-S. Is this ok?

Thanks!

[MaryK4 · Accepted solution]

Yes, it is perfectly fine for your entry to appear under the "1099-B" section even though you have a 1099-S. TurboTax uses the same investment interview (Form 8949/Schedule D) to process most property and asset sales.

Since you sold a permanent easement but still own the underlying land, you usually do not have to pay tax on this money immediately. Instead, the IRS considers this a "recovery of cost".  You should reduce the original cost (basis) of your property by the amount you received ($9,475).
 

Because the IRS received a copy of your 1099-S, you must report it to avoid a mismatch notice. To make it non-taxable:
Enter $9,475 as the Sales Proceeds.
Enter $9,475 as the Cost Basis (this results in $0 gain).
Keep a record that your property's actual basis has now decreased by $9,475 for when you eventually sell the entire property in the future. 
 

[dallasjh89]

Thank you so much, you were a huge help!