The city took part of my front yard and are going to widen the street. they paid me $ 15,000 and sent me a 1099S. I want to just reduce basis. How do I report?

[Ashby · Accepted solution]

You report this under "sale of second home" and just choose land. You can put your basis in the property the same as the payment and you will not have a gain or loss. You can find the instructions at the bottom.

I have also included what the IRS says about "easements" which is the closest thing to your scenario. Be sure that what they are taking is worth the amount paid in case your return ever came under review.

Easements

The amount you receive for granting an easement is generally considered to be a sale of an interest in real property. It reduces the basis of the affected part of the property. If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain

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