debbi.riordan
Level 2
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I thought they were supposed to just adjust basis but due to 1099S what do we do?
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dkh
Level 12
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Report with the cost equal to the proceeds on 1099-S.... keep information so when/if client sells property they adjust basis by the cost applied towards the proceeds

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debbi.riordan
Level 2
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Thank you so much. They also received a 1099misc for “rents” which was for compensation while the project was being completed. How do I handle that portion? 

dkh
Level 12
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You're welcome.    I'd report the 1099-MISC on Schedule E 

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debbi.riordan
Level 2
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Shouldn’t that also be offset and the basis be lowered? 

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dkh
Level 12
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Not how I would handle.  I would report as rent income just like the 1099 indicates it was

debbi.riordan
Level 2
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Thank you 

PhoebeRoberts
Level 9
Level 9
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Surface damages don't reduce basis, no.