Thank you for using justanswer. If I'm following your question, you sold dirt from some land that you owned. That means that you have some sort of basis in the dirt (even though I know this may sound a little strange, since most of us
don't normally consider dirt as necessarily have a cost basis, however, its really no different than if you have sold timber that stood on the land)
I would think that you could arrive at a reasonable cost basis of the dirt by asking a Realtor what the land would have sold for before the dirt was removed, and what that particular piece of land might be worth now that the dirt has been removed, and the difference would be your cost basis. (You will need to keep good records in case you decide you actually want to sale the actual piece of property
at a later date, and you won't want to "double dip" on the cost basis)
If you are in the business of selling dirt, then you would report the sale on 2009 Form 4797Sales of Business Property .
If this was a 1x sale, then you would report
sale on 2009 Form 1040 (Schedule D
In either case, you would only pay tax on the difference between your cost and the sales price, plus if you owned the land (and the dirt) more than 1 year, the profit would be taxed at the more advantageous capital gains tax rate
(maxed at 15%)
I hope this helps.