So I need some guidance. I'm doing my taxes and my wife has a small percentage of a property that they sold the easement to DCP Midstream to drop a pipeline across it. We are told that of the total paid a certain percentage of that is allocated to compensation and a percentage to damages to the property. The damages being non-taxable at this point.
In doing my taxes, we have the breakdown sheet from DCP showing the damage calculations. The 1099-MISC we received simply shows the full amount we were paid(in box 3 as other income). Now, if I'm filling everything out, where do I account for this damage portion? Do I just put a lower # in the line for the 1099-MISC(being the difference of course)? Or do I put in the full amount and then deduct the damages somewhere else? If needing to deduct the damages somewhere else, where does that get done? I can't seem to figure that part out.
Anyone here a CPA and can help? Anyone ever done this before for their property?