Have a Tax Question? Ask a Tax Expert
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 you...it doesn't whether it results in net income to you.
I hope this has given you the guidance you were seeking. I wish you the best of luck!
If you have a follow-up question, please remember that there might be a delay between your follow up questions and my answers because I may be helping other clients or taking a break.
If I have adequately answered your question, even though the answer might not have been the one for which you hoped, I would appreciate it if you would please click the GREEN ACCEPT button so that I receive credit for my work; otherwise, though you have made a deposit, I do not receive credit.
If you need additional clarification on this question after clicking ACCEPT, please do not hesitate to click Reply and I will be happy to do what I can to help you further. Thanks for allowing me to be of service to you.
The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.
I am going to opt out and let someone else help you. Take care.
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.