The county pays taxpayer $1140.00 for "right of way easement" (that is on the 1099-S)? Can it be offset by basis? If income I am assuming long term capital gains?
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Easement-Right of Way
This will be a reduction of basis in the land.
If the client did receive a 1099 for this then report it on Sched. D using the cost as
the same as the sales price. Zero gain or loss. This will prevent a letter from the IRS. -
Well... its not quite as clean, regarding basis reduction, as Bird Legs implied. You first have to determine basis just for that specific part of land that has the easement. Such allocation can be by square foot, but can also take into consideration value of property location. If the amount received is more than the basis you would have a taxable gain, otherwise, I agree with Bird Legs.Comment
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