Utility Easement 1099-Misc

Forum|Forum|2 years ago
March 18, 2024
1 reply
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I have a Utility easement on my property. I received a 1099-Misc from the utility and the 1099-Misc list the monies received as "Rent". So, I entered the 1099-Misc in Business Income. Then place the same amount in Business Expense and labeled it as "Reduction in basis foe easement" to offset "Rent" as income. The next step in Turbo Tax is "Rental Properties and Royalties". Do I need to include the utility easement monies (1099-Misc) here too? Or does Turbo Tax already take care of this? Thanks

TurboTax Home & Biz Windows

Best answer by mglauner

Correct. You have properly reported your 1099-Misc Income and Offset for a utility easement. The only thing that changes is your Cost Basis in the land, should you sell it.

Here's more info on Utility Easement Payments.

JamesG1

It sounds like you have recorded the IRS form 1099-MISC income and reversal within business income. If you have already reported the income and reversal, I would not post it in Rental Properties and Royalties as well. I have posted another variation below because many customers do not report self-employment income or rental income.

If you still own the land after a utility easement, the general treatment is that the payment is not income but reduces the basis in the land that you own. So, if you paid $10,000 for the land and received a right of way payment for $1,000, your new basis in the property is $9,000.

You still have to deal with the IRS form 1099 that was reported to the IRS.

Report the income, then immediately report a minus entry for the same amount. Reference both entries as 'right of way sold - basis adjustment'.

Follow the steps below to report this income that is not reported as self-employment income.

Select Federal from the left side of the screen.
Select Wages & Income on the left side of the screen.
Scroll down to Less Common Income. Click the down arrow.
Click Start / Revisit to the right of Miscellaneous income….
Click Start / Revisit to the right of Other reportable income.
At the screen Other Taxable Income enter the description of the income.
Click Add another Miscellaneous income Item and enter the reversing entry.

View the entries at Tax Tools / Print Center / Print, save or preview this year's return / Include government and TurboTax worksheets.

The income will be listed on line 8z of the Schedule 1 Additional Income and Adjustments to Income and line 8 of the Federal 1040 tax return.

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ncatalina3Author

So, if I read your reply correctly. I am done with reporting my 1099-misc since I placed it as income in my Misc Business Income and off set it by placing the same amount in Misc Business Expenses by labeling it "Reduction in basis for easement"? Please note I am a Maple Producer not an Investor or Landlord.... so that doesn't change anything does it?

Thanks

mglaunerAnswer

Correct. You have properly reported your 1099-Misc Income and Offset for a utility easement. The only thing that changes is your Cost Basis in the land, should you sell it.

Here's more info on Utility Easement Payments.