I'll tell you how I've handled this type of transaction for my clients.  I report on Schedule D - report the proceeds from 1099-S with a matching cost basis.  Client will then have a reduced basis in their remaining property by the proceeds.     No need to call the county/state/or Ghostbusters......

EDIT:  CALL THE COUNTY/STATE/or GHOSTBUSTERS if you need but I'm betting your client has all the documents you need to make an informed decision on how to handle this transaction.

My apologies if my original answer was misleading.