Where to report payment for a permanent easement for a pipeline

[bob28]

we didn't receive a 1099 form.  We normally receive a rental payment for the land in question for use in a farming operation.

[MichaelL1 · Accepted solution]

Good news is that the easement income you received is not income to you if it is less than the cost of the land.  It does however reduce the cost (or basis) of the land, when and if it is sold.

If this is the case, the payment is reported in the Investment section and the cost would be the same as the income, ie, no gain or loss. 

See the following similar question I answered earlier on this topic.  If this does not answer your question, please post a comment and I can help.

https://ttlc.intuit.com/questions/3620922

[Nan3]

MichaelL1,

We received a 1099 Misc for 2019 from pipeline company for an easement across our property.  We are not selling the property at present.  I understand the easement payment is not income, and would instead be subtracted from the basis of the property if we sell.

In your to Bob28 in June of last year you said:  "If this is the case, the payment is reported in the Investment section and the cost would be the same as the income, ie, no gain or loss."

I assume you meant he enters the 1099-Misc data only when he sells the property?

Do I enter nothing on this year's taxes with regards to this 1099-Misc? 

Thanks.

Nan3

[KrisD15]

Usually an easement is reported on a 1099-S, so you can report the same amount as the basis and there would be no gain, no taxable income. 

A 1099-MISC reports rents, royalties or compensation. 

The IRS gets a copy of all 1099-MISC and will want to see it reported on your tax return.

Which box is reported on your 1099-MISC? 

[Nan3]

KrisD15,

The money is entered in Box 3 on the 1099-Misc.  When I put the information into TurboTax, I get taxed on it.  But the easement money is not taxable (IRS Pub 544).  Hence my dilemma.  How to I indicate the existence of the 1099-Misc without paying tax.

Nan3

[JohnW222]

Please see KrisD's outstanding guidance on entering your easement payment from Form 1099-MISC.