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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 53664
Experience:  29 years of experience as a tax, real estate, and business attorney.
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i am a landowner in s texas and received monetary damages for

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i am a landowner in s texas and received monetary damages for digging up a pipeline easement across my land to repair one of 3 pipelines which cross my property - i did receive a 1099 misc - is this to be reported as income or dimunition in the value of the basis of the land - tks
Submitted: 5 years ago.
Category: Tax
Expert:  Richard replied 5 years ago.

Good afternoon. Since the money was to reimburse you for damages, there is not deemed to be any increase in your wealth....i.e., the increase in money merely offset damages to your property value...and thus there is no income. The 1099 merely indicates the money was paid to doesn't whether it results in net income to you.



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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 53664
Experience: 29 years of experience as a tax, real estate, and business attorney.
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Customer: replied 5 years ago.
for $30 how about whether there is dimunition of the basis should i decide to sell tomorrow
Expert:  Richard replied 5 years ago.

I am going to opt out and let someone else help you. Take care.

Expert:  Lev replied 5 years ago.

Hi and welcome to Just Answer!
The amount you receive for granting an easement is generally considered to be proceeds from the sale of an interest in real property. It reduces the basis of the affected part of the property. If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain.
However - if that amount was reported to you on the form 1099-misc and assumable to the IRS - the IRS will expect that amount reported on your tax return. To avoid additional questions - I suggest adding a note to your tax return with explanation and reasoning why this income was not included into taxable income.

The amount you received is not excluded from taxes - you actually will reduce the basis and defer tax liability till the time you sell the property. If you sell the property with the gain - it will be your taxable capital gain.

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