I sold an undeveloped investment property at a loss of $16,000. I am about to receive a bonus payment of $40,000 for a mineral rights lease. Can I offset my gains on the lease bonus with the loss of my investment property. If so how can I do this?
digging through the IRS pubs to no clear explanation
These two items, a sale of property and a lease payment are not the same types of income. They cannot directly offset each other.
The sale of property is capital in nature. It can only directly offset capital items. If you have other capital gains in the same tax year, they can offset each other. If not, you can only deduct up to $3K per year in capital losses against ordinary income.
The mineral rights payment is ordinary income, not capital gain.