Yes, report the 1099-misc and then a negative adjustment. Payments for easements are not taxed, but the basis in your property must be reduce by that amount.
Sign into your account and return. Click the “Pick up where
I left off” bar
Click on Federal
on the left side-bar, then Wages &
Income along the top.
When you get to the Income section, (you may need to click
"Show All Income" first) Scroll down to Other Common Income and Click Show more
Click Start or Revisit for Form
1099-MISC
Enter a description
for the non-work income, such as “Easement Payment” for the reason and Continue
Click “None of these apply.” at the bottom of
the list for “Does one of these uncommon situations apply? And Continue
Answer “No,
it didn’t involve work like my main job.” on the next screen and Continue.
Click the year you got the reward and Continue (if you received this income for more than 2 years, the IRS
will consider it as self-employment)
Answer “No, it didn’t involve an intent to earn
money.” on the next screen and continue.
Do you have another
1099-MISC? Click No and Continue
Click Done.
The income will show as a line item on line 21 of Schedule 1
of the 1040 and not as Self-employment.
Next, make the adjustment for the reduction in value (basis)
Click on Federal,,,Wages & Income,,,,scroll
down to the last section "Less Common Income"
Scroll down to the last choice "Miscellaneous
Income, 1099-A 1099-C" and Start
Scroll down to the last choice "Other reportable
income" and Start
For the Description enter "Reduction in basis
for easement"
Enter the amount of the easement payment AS A NEGATIVE NUMBER
(remember that you are also reducing the basis in your
property by this amount.)
Click Continue and Done
The 1099-MISC and your adjustment will show on Schedule 1
line 21 and flow to the 1040.
