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1099MISC for tree damage caused by utility company on an easement. Current year 1099 MISC is for damages that took place on easement. Is damage payment taxable?

Forum|Forum|7 years ago
June 3, 2019
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Utility company expanded easement and purchased additional footage last year (2106) and provided 1099MISC last year. Included on tax return in 2016 but will reduce basis of property. Not taxed. This year (2017) is for payment of damages to trees and land due to replacement of poles and lines. Reported to us on 1099MISC. How do we treat damage payments for tax purposes?

TurboTax Deluxe Mac

Best answer by PatriciaV

Yes, the damages to the easement on your property are considered a Casualty Loss. The payment is recorded as a non-taxable reduction to the basis of your property, as long as the payment isn't more than the original basis of the property. Any amount over your basis would be ordinary income.

In short, if you know the adjusted basis of the property, you may report this in the same way you reported the original easement payment last year. A casualty loss that is equal to the "reimbursement" you received nets to zero, and is not a taxable event.

PatriciaVAnswer

Employee

Yes, the damages to the easement on your property are considered a Casualty Loss. The payment is recorded as a non-taxable reduction to the basis of your property, as long as the payment isn't more than the original basis of the property. Any amount over your basis would be ordinary income.

In short, if you know the adjusted basis of the property, you may report this in the same way you reported the original easement payment last year. A casualty loss that is equal to the "reimbursement" you received nets to zero, and is not a taxable event.

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