| Title: | Market Investing |
| Moderator: | 2155::michaud |
| Created: | Thu Jan 23 1992 |
| Last Modified: | Thu Jun 05 1997 |
| Last Successful Update: | Fri Jun 06 1997 |
| Number of topics: | 1060 |
| Total number of notes: | 10477 |
In 1991 I received a payment from my town for granting them an easement
to run a sewer line through my property. I'm not sure how this money
should be treated. I called the IRS and they said that it isn't
income and should be used to reduce my property's basis at the time
it is sold. If the payment is more than the sale price of the property,
the difference would be treated as a capital gain. They said I don't
have to file anything about this until I sell the property. Knowing the
accuracy of the IRS helpline, does this sound right? Has anyone had
experience with payments for easements?
Mike
| T.R | Title | User | Personal Name | Date | Lines |
|---|---|---|---|---|---|
| 81.1 | Go with basis reduction. | CSCOA1::SOVEREIGN_S | but once a knight is enough(?) | Wed Feb 26 1992 16:47 | 14 |
The payment reduces your basis in the property *now*. You will
probably not reflect it until the time the property is sold, unless the
$ amount is more than you have invested in the property. (Your "basis")
If the payment is MORE than your basis in the property, it is a capital
gain effective at the time the money changed hands, and should be
reported as such.
As fas as it applies, the easement payment reduces your basis in the
"land" first, and then if any is left it reduces your basis in the
structure. (useful if you decide to convert it to rental or other
business use later and have to depreciate it)
Steve
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