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My first thought, on seeing the topic and intro, was joy to hear from Kerry/Monkeyman and to hear about William Tasker. That quickly turned to sorrow on hearing the sad news. He was a wonderful man, and has been greatly missed by us ATX users. Now he will be even more missed. Thank you, Kerry, for letting us know the news. And pop in here from time to time yourself, and say hello. We have happy memories of you, as well, and you should know we stand as your friends still.

As others have posted it depends on the facts and circumstances. First you have to determine if it is actually an easement not subject to terms of reversion. An easement is considered a sale if grantor basically ends up without any rights to use the property. On the other hand, if the easement has minimal effect on the landowners use of the land, it is considered a return of capital and reduces basis. But here is the catch. In most situations, the reduction in basis only applies to the portion of the land which includes the easement. So if the easement covers one acre out of 100 acres, only the basis of one acre is reduced. Therefore the amount of payment that exceeds the basis of the land specific to the easement is gain. There are a few court cases where basis reduction was applied beyond the property that was directly effected by the easement. 1033 can apply in the case of involuntary conversion. Also in cases where replacement property is purchased due to severance damage. I reported the sale price and related basis reduction to head off an IRS letter.

Agree completely with Dan's post above. I have also reported the sale and related basis reduction as he mentioned and never heard from IRS. I also kept a note of the basis reduction in a permanent file and as a brief note/reminder in my tax program that would carry forward with each subsequent year.

So sorry to hear of the loss of a wonderful man. His memory will live on in our hearts and minds.

This morning I have been watching the squirrels and blue jays scrambling to see who can grab the most peanuts. Good preparation for tax season

And there will also be interest to report on a sale that lasts three and a half years, even if the contract does not call for interest. In that case, part of the proceeds have to be considered imputed interest from every payment except the down payment.

I think you need Form 6252, which does report the income actually received in each year. If there was depreciation taken, you may have extra depreciation recapture in the first year.

This is truly heartbreaking news. He was such a kind soul. Prayers to his family and friends

Canoeing with friends........ Indoor magic with pets......... Snowball fight with a neighbor........ A warm bath after the winter chill.....

If her motive is profit, my answer would be yes. I successfully got a "no change" on a partnership audit, because of years of regular losses. They partners ARE in it for a profit motive. They're just really bad business-people. That first part IS in the IRS regs, and the second part is NOT. I think the main part of my argument was simply that incompetence does not preclude profit motive, and was able to show that motive as well as (futile) steps taken to improve. That's a long-winded way of stating the simple fact that several years of losses does not, prima facie, constitute lack of profit motive. If, however, she still skates professionally "because she loves it" and would do so even if never paid, then you have a hobby. If she is working on her standing to open a school, then you're in a gray area; does she have profit motive for what she is doing currently?

Here are some references you might want to look at: rev rul 72-255 rev rul 70-510 Inja Land Co... Gilbertz...

NEI Mod edit: acronym means "not enough information"

What type of easement and with whom? Was this a voluntary transaction or involuntary conversion?

Unless this is a large estate the issue is probably moot. Not many clients have taxable estates in excess of $11.4m (double that for MFJ).

Cider Aftermath............

It depends on the facts and circumstances, it could be a reduction in basis or it could be a capital gain.

https://www.irs.gov/newsroom/irs-reminds-tax-professionals-of-tasks-to-get-ready-for-2020 Quite an informative list....

Condolences to his family and friends. May he rest in peace.

Ditto to all that has been said. I still remember talking to him, it was like talking to a best friend.

That was a great organization with with outstanding people. RIP William. Thank you for the post Kerry.

You're missing one GIF of hot cocoa.