How to report Vacant Land Sale on taxes? 1099-S form question for undeveloped property

How would selling expenses work? I paid about $950 in closing costs when I sold the land. Can I subtract that from the profits?

Yes, you can definitely add those selling expenses to your cost basis! Your $950 in closing costs would be added to your purchase price of $11,500, making your adjusted cost basis $12,450. This means your taxable gain would be reduced to about $9,050 ($21,500 - $12,450) instead of $10,000. This is exactly why it's important to track all expenses related to buying and selling property - they can significantly reduce your tax liability. The same applies if you made any improvements to the land while you owned it (though for vacant land these might be limited).

Does it work with other forms too? I have a bunch of 1099-NECs and a K-1 that are confusing me.

I'm a little skeptical... how exactly does it calculate the basis? My situation is complicated because I inherited my vacant land from my parents in 2015 and have no idea what they paid originally.

It definitely works with 1099-NECs and K-1 forms! It analyzes the forms and then breaks down exactly where each number needs to go in your tax return. For the self-employment income on 1099-NECs, it even helps figure out what business expenses you might be able to deduct. For inherited property, it actually asks specifically about that situation. When you inherit property, you get what's called a "stepped-up basis" to the fair market value at the date of death. It guides you through determining that value using county assessment records or possibly getting an appraisal retroactively. Inheritance actually simplifies the basis question since you don't need to know what your parents originally paid.

It's actually really simple - they use technology to navigate the IRS phone system and secure your place in line. When an agent is about to be connected, you get a call and they connect you directly to the IRS agent. No more waiting on hold for hours or getting disconnected. I completely agree that the IRS should have a better system! It's ridiculous that we have to resort to third-party services just to talk to someone about our taxes. But until they fix their understaffing and outdated phone systems, this was a lifesaver. And honestly, the peace of mind from having an official IRS answer to my specific situation was worth it. Google searches were giving me contradictory information about reporting vacant land sales.

So how does this actually work? You pay them to wait on hold for you? Seems weird that this service even needs to exist. The IRS should just have a better phone system.

Sorry but this seems kinda scammy. Couldn't you just get the same info from the IRS website or by googling? Why pay someone to hold your place in line?

It's actually really simple - they use technology to navigate the IRS phone system and secure your place in line. When an agent is about to be connecte

What about the costs to list and advertise the property? I paid a realtor commission and some advertising fees to sell my vacant lot.

Absolutely - realtor commissions and advertising costs to sell the property can be deducted from your sales proceeds! These are considered selling expenses and directly reduce your capital gain. For example, if you sold for $21,500 but paid $1,500 in realtor commissions and $300 in advertising, your net sales proceeds would actually be $19,700. This would significantly reduce your taxable gain. Make sure you have documentation for all these expenses in case of an audit.

I used TurboTax last year for a similar situation. It was pretty straightforward - it has a specific section for real estate sales that aren't your primary residence. It guides you through the whole process with questions about purchase date, sale date, costs, etc. Much clearer than some of the free options.

Thanks for sharing your experience! That's super helpful. I might switch over to TurboTax then. Cash App's interface is really confusing me for this land sale stuff, and I'd rather pay a bit more than risk doing it wrong and getting audited.

This is an excellent summary! As someone who's new to property sales, I really appreciate you breaking down all the key points in one place. The step-by-step basis calculation is especially helpful - I was getting confused trying to figure out what expenses I could include. One quick question: when you mention keeping documentation for the IRS, what specific documents should I make sure to save? I have the original purchase contract and the 1099-S, but should I also keep receipts for things like the survey or any maintenance I did on the property?

Absolutely keep all those receipts! For property transactions, the IRS recommends keeping records for at least 3 years after filing, but I'd suggest holding onto them longer since property records can be important for other reasons too. Specifically, you should save: - Original purchase contract and closing statement - All improvement receipts (surveys, grading, utilities, etc.) - Selling expenses (realtor fees, advertising, legal fees) - The 1099-S form - Any property tax records during ownership - Insurance records if you had any Even small expenses can add up and reduce your taxable gain, so it's worth being thorough. I learned this the hard way when I couldn't find a $400 survey receipt during my first property sale and had to pay tax on that amount unnecessarily!