How to record sale of Air Rights

[JOEPCPA]

If  a client sells air rights above their building, is that a capital gain or ordinary income?

If capital gain, is basis zero?

Thanks, Joe

[Terry53029 · Accepted solution]

I would think it is an asset, and therefore subject to capital gain/loss. As far as basis it would be what he paid for said air rights, Probable zero basis

[JOEPCPA]

Thanks much

[BobKamman]

On the other hand, most of what he paid for the entire property might be allocated to the air rights.  If you want 27 pages instead of two sentences, check this out:

chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://scholar.smu.edu/cgi/viewcontent.cgi?article=2329&context=jalc

[JOEPCPA]

Thank you!