1099-Misc rental income for easement. Show as rental income or reduce basis?

Forum|Forum|6 years ago
December 7, 2019
2 replies
21 views

My client received a 1099-Misc rental income for an easement for her driveway. Should I show as rental income or just reduce basis in the property?

Lacerte Tax

This topic has been closed for replies.

Best answer by TaxGuyBill

If it truly is a permanent easement, it would reduce Basis. To avoid an IRS notice, you may want to report it as rental income then 'back it out' by an equal negative amount, resulting in a net of $0 rental income.

However, there seem to be various situations that are similar that would be classified as rent, so you may need to do further investigation for what the payment actually was for.

https://www.thetaxadviser.com/issues/2014/mar/kebodeaux-mar2014.html

T

TaxGuyBillAnswer

If it truly is a permanent easement, it would reduce Basis. To avoid an IRS notice, you may want to report it as rental income then 'back it out' by an equal negative amount, resulting in a net of $0 rental income.

However, there seem to be various situations that are similar that would be classified as rent, so you may need to do further investigation for what the payment actually was for.

https://www.thetaxadviser.com/issues/2014/mar/kebodeaux-mar2014.html

I

ironmomAuthor

Level 4

Thank you for taking the time to answer this - I appreciate it.

Sign up

Login with SSO

Let's get you signed in

Login with SSO