How to File the Sale of Vacant Land With the IRS
According to Internal Revenue Service publication 544 , "Sales and Other Dispositions of Assets," you must report the sale of vacant land as a capital gain or loss. Use Form 8949, "Sales and Other Dispositions of Capital Assets," to figure the amount of gain or loss from the sale. Transfer the results to Schedule D and Schedule I, addendums to Form 1040.
Form 8949 Option Selection
Form 8949 is divided into two sections: Part I for short-term transactions for property held for one year or less and Part II for property held for longer than one year. Both sections have an option selection regarding Form 1099-B that brokers use to report the sale of stocks to the IRS. Because you would not receive a 1099-B from the sale of your vacant land, check box "C" in Part I or "F" Part II, depending on how long you owned the land before selling it.
Form 8949 Information Entry
Enter a description of the property in column (a) of the section in which you checked Box "C" or "F." Enter the date you acquired the vacant land in column (b), the date you sold it in column (c) and the sale price in column (d). Use columns (e), (f) and (g) to enter all costs incurred in the acquisition and sale of the vacant land, then enter the total gain or loss in column (h). See specific instructions for Form 8949 and all other forms at the IRS website.
Additional Copies of Form 8949
If you have any other transactions for the tax year that require Form 8949 for which you have not been sent a Form 1099-B, you may include them on the same form on which you entered the sale of your vacant land. But you may not add transactions for which you have been sent Form 1099-B. You must report those on separate copies of Form 8949 with the appropriate boxes checked: "A" or "D" for 1099-B forms that report the transaction to the IRS and "B" or "E" for those that don't.
Schedule D Completion
Schedule D summarizes all capital gain and loss activities for the tax year. It also uses a Part I for short-term and a Part II for long-term, along with a summary of all capital gain and loss activity in Part III.
Enter the total from the Form 8949 that includes your vacant land sale, along with the totals of any other Forms 8949 required for your particular tax situation. Transfer the sum total gain or loss from Schedule D to your Schedule I as an addition to your total income for your Form 1040. Include Form 1040, Schedule D, Schedule 1 and all copies of Forms 8949 with your tax return.
Richard Asmus was a writer and producer of television commercials in Phoenix, Arizona, and now is retired in Peru. After founding a small telecommunications engineering corporation and visiting 37 countries, Asmus studied broadcasting at Arizona State University and earned his Master of Fine Arts at Brooklyn College in New York.