Proceeds of a buyout per the divorce property settlement reported on 1099-S. How should this be reported?

[vjh3455]

The property settlement called for a payment of $225,000 as a buyout for my portion of marital property.  My former spouse had the option to sell or refinance property.  What had been his primary residence sold before the divorce was final but after the property settlement was executed.  The funds due to me were paid at the closing of the sale.  I received a 1099-S from the Title company even though my attorney made clear that the payment was to be a payout and not as a sale of the residence.  I have lived out of state for 5 years therefore do not meet the rule of living in the residence 2 out of the last 5 years so do not meet the exclusion to sell this as my primary residence.  I know I need to show the 1099-S but how do I then back it out so that the transaction is a non-taxable transfer of property pursuant to a divorce property settlement?

[ToddL]

Enter the Form 1099-S in the "Stocks, Bonds, Mutual Funds and Other" interview under Federal Taxes > Wages and Income > Investment Income. 

There is no "1099-S" interview, so you will enter it as a sale where you did not receive a Form 1099-B (see attached sample screenshot).

Complete the interview, indicating what the payment was for (Property Settlement), how you acquired it (Divorce) and set your former spouses' "Basis" to the amount reported on your 1099-S (see attached sample screenshots).

The program will show your "gain" on this transaction as "0".

[sabattja]

Hi, I cannot see the screen shot and need this badly. I do appreciate your help

[MarilynG1]

This section is not yet ready in TurboTax, as some of the forms needed have not yet been finalized by the IRS.

Below is a screenshot where you will make your entry in TurboTax Online. 

Follow the instructions as per @ToddL above if your situation is the same (received a payout per divorce settlement).  

Click this link for a listing of Federal Tax Form Availability.

@sabattja

[sabattja]

Thank you for reply.  I am kind of confused about this screenshot.  Will please post a screenshot of the tax form to follow up

[KrisD15]

If you post a copy of your tax form, please block out all personal information. 

Additionally, can you clarify your question? You seem to have posted onto a thread. Do you also have a 1099-S or something else? Did you receive a divorce settlement of some kind?  

[sabattja]

To explain this better, proceeds of a buyout per the divorce property settlement in last December, I sold my share to my ex-wife and the amount I received was supposed to be tax free, but I just received a 1099-S for it.  Actually 1099-S is a part of Turbotax premier, but when it comes to the interview I don’t know how to answer it and the code letter for adjustment to avoid paying taxes on it.  If I see a simple form for this case I can manually change my tax return form to make it work.

[MarilynG1]

If you are using TurboTax Desktop and enter as @ToddL suggests, you will see the entry on the Capital Asset Sales Worksheet, Form 8949, and Schedule D.  There will be no Gain or Loss reported. 

Click on FORMS in the upper right to see the list of forms in your return.

Click this link for more info on Forms Mode. 

Since you did not actually sell your home, but received a payout from your ex-spouse, you should not have received a 1099-S and may not want to use that interview.

If you choose to report the 1099-S as a Sale of Main Home, you may qualify for Home Sale Exclusion anyway. 

You may want to consult a tax attorney for your particular situation.