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February 3, 2023
Question

I had to sell part of my home property to the state for highway expansion. I received a 1099S. do i have to claim the money i received.?

  • February 3, 2023
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1 reply

February 4, 2023

maybe.   there is IRC 1033 for involuntary conversions, gain may be postponed to the extent you purchase replacement property that is similar to the old property. the replacement period is generally 2 years after the year of the gain. the election to defer the gain on an involuntary conversion is made by excluding the gain from income and attaching a statement to the return reporting all of the conversion details (TurboTax has this election type "election" in search/jump to box )

NOTE. your gain is only the excess of the proceeds over that tax basis of the property taken. 

you do not have to reinvest all the proceeds but any portion not reinvested is taxable. 

report in part 1 of form 4797. the gain is capital gain so 

 

 

i would suggest that you compute what the tax may be - depending on your income the gain could be taxed at zero % which would make reinvesting unadvisable.