IRS Form 1099-S Proceeds From Real Estate Transactions is used to report proceeds from real estate transactions. Where this information is reported depends on the use of the property (personal use, investment use, or business or rental use).

Personal Use

If the 1099-S was for the sale of a personal home, enter the transaction on Form 1099-B in TaxACT. For additional information see the IRS Instructions for Form 1099-S.

1. Click on the Federal tab
2. Click Investment Income to expand the category and then click Gain or loss on sale of investments
3. Click Capital gain or loss (Form 1099-B)
4. The program will proceed with the interview questions for you to enter or review the appropriate information

If you incurred a loss on the sale of the home, you are not allowed to deduct this loss since it is personal use property. You will need to select Adjustment Code L when entering this transaction on Form 1099-B. The program will then offset the calculating loss through an adjustment amount. This will net the loss to zero on Form 8949.

If the home was your main home and the ownership and use tests are met, you may qualify to exclude all or a portion of the gain on the sale. The maximum exclusion amount is $250,000. If the gain can be excluded, select Adjustment Code H when entering the transaction on Form 1099-B. Then enter the exclusion amount as the adjustment amount. TaxACT will then determine the net taxable gain and report this on Form 8949. Refer to IRS Publication 523 Selling Your Home for information on the sale of your home, the ownership and use tests, and the exclusion amount.

If the 1099-S was for a timeshare or vacation home, then it would be considered a personal capital asset to you and the sale would be reportable on Federal Form 8949 and Schedule D. A gain on this sale is reportable income. If you incurred a loss on the sale you are not allowed to deduct this loss since it is personal use property. The same would be true for inherited property if it is a personal capital asset. You would need to select Adjustment Code L so the loss is disallowed on the return.

Note that if the inherited property would be considered investment property, then the capital gain or loss would be reported on Form 8949 and Schedule D and the loss would be allowed. For those instructions, see Investment Use below.

Generally, your basis in property you inherited from a decedent is the fair market value at the date of the individual's death. However, you should refer to IRS Publication 551 Basis of Assets for further information.

Investment Use

If the 1099-S was for investment property (or, as mentioned above, inherited property that is considered investment property), the sale would be reportable on federal Schedule D:

1. Click on the Federal tab
2. Click Investment Income to expand the category and then click Gain or loss on sale of investments
3. Click Capital Gain or Loss (Form 1099-B)
4. Click Add to create a new copy of the form or click Review to review a form already created
5. The program will proceed with the interview questions for you to enter or review the appropriate information

Business or Rental Use

If the 1099-S was for the sale of business or rental property, then this is reportable on IRS Form 4797 and Schedule D:

1. Click on the Federal tab
2. Click Business income to expand the category and then click Business income or loss from a sole proprietorship or Rent and Royalty Income depending on the type of business owned the disposed asset
3. The program will proceed with the interview questions for you to enter or review the appropriate information