Did you sell a right of way easement? Do you still own the land and still pay property taxes on the land? Or was there an actual sale of the land and the new owner pays the property taxes on the land?
If you still own the land, the general treatment is that the payment is not income but reduces the basis in the land that you own. So, if you paid $10,000 for the land and received a right of way payment for $1,000, your new basis in the property is $9,000.
You still have to deal with the 1099 that was reported to the IRS. Report the income, then immediately report a minus entry for the same amount. Reference both entries as 'right of way sold - basis adjustment'.
Follow the steps below to report this income that is not reported as self-employment income.
- Select Federal from the left side of the screen.
- Select Wages & Income on the left side of the screen.
- Scroll down to Less Common Income. Click Show more.
- Click Start / Revisit to the right of Miscellaneous income….
- Click Start / Revisit to the right of Other reportable income.
- At the screen Other Taxable Income enter the description of the income.
- Click Add another Miscellaneous income Item.
View the entries at Tax Tools / Print Center / Print, save or preview this year's return / Include government and TurboTax worksheets.
The income will be listed on line 8z of the Schedule 1 Additional Income and Adjustments to Income and line 8 of the Federal 1040 tax return.
@Ed Haffner
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