Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

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

ironmom
Level 3

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?

0 Cheers

This discussion has been locked. No new contributions can be made. You may start a new discussion here

1 Solution

Accepted Solutions
TaxGuyBill
Level 15

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


View solution in original post

0 Cheers
2 Comments 2
TaxGuyBill
Level 15

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


0 Cheers
ironmom
Level 3
Thank you for taking the time to answer this - I appreciate it.
0 Cheers