Land gifted to me by a parent with a quit claims deed was sold below the assessed value. How do I report this?

You need to report this land sale as the sale of a capital asset. Since the property was gifted to you, you will have a carryover basis in the property. This means that your basis for determining an capital gain or loss will be the same basis in the property that your parents had in it. (That would be their original cost plus any capital improvements to the land before gifting it to you).

Unfortunately, the IRS does not allow a capital loss on the sale of personal use property. This rule applies to the sale of land that was a personal use property. The TurboTax system will enter a capital loss of zero for this transaction. If the land was held as an investment, you will be able to deduct any capital losses.

Click this link for further information about reporting the sale of a capital asset 

To enter this gifted land sale in TurboTax Online or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Wages & Income” ("Personal Income" in TurboTax Home & Business)
3. Next click on “I’ll choose what I work on” (jump to full list)
4. Scroll down the screen until to come to the section “Investment Income”
5. Choose “Stocks, Mutual Funds, Bonds, Other” and select “start’ (or “update” is you have already worked on this section)
6. The first screen will ask if you sold any investments during the current tax year (This includes any sale of real property held as an investment property so answer “yes” to this question)
7. Since you did not receive a 1099-B, answer “no” to the 1099-B question
8. Choose type of investment you sold - select Land
9. Some basic information:
1. Description –  Usually the address of the property sold
2. Sales Proceeds – Net proceeds from the sale 
3. Date Sold – Date you sold the property
10. Tell us how you acquired the property - gifted
11. Some Basis information
1. Date of gift - Date your parent's gifted you this property
2. FMV at time of gift - The fair market value at the time gifted to you.
3. Date acquired by donor - Original purchase date by your parents
4. Donor's cost basis - Original cost to your parents plus any capital improvements to the property.
12. If a loss, you will need to answer a question about use of the land. If used for personal use, you will not be allowed to take a capital loss on person use property.