How to enter a net 0 taxable grant

Forum|Forum|3 years ago
February 8, 2023
1 reply
9 views

I received a taxable grant for clearing my forest and have expenses to offset the income. How should this be reported?

ProConnect Tax

This topic has been closed for replies.

qbteachmt

Level 15

Did you get a 1099 of some sort? USDA grant? Is this farm land, commercial timber, personal yard? Is this a personal question or are you a tax preparer and this is for a client? Is this for a 1040, 1065, 1120, etc?

Details matter.

Don't yell at us; we're volunteers

C

careychaputtax-gAuthor

Level 3

Yes, I received a 1099G from the State Forestry for my part in a Community Firewise Grant. Some residence in my community did not receive any forms as the work was covered by the State Forestry contract. I am a tax preparer for 1040 individual and have always entered these transactions in Other Income not subject to SE tax with an adjusting entry for the expenses incurred. Is this acceptable with a statement that the funds are from a Gov't Grant, promotes the general welfare as a Community activity and is not compensation? Neighbors are asking my advice and I wanted to be sure that my approach is correct.

qbteachmt

Level 15

"promotes the general welfare as a Community activity"

That's not made to the IRS. That is why your State issued specific grants (such as covid mediation to health care providers) and that is not the nature of this grant. This was more of a rehab and prevention program. If someone had expenses lower than the grant, the difference would be taxable, not avoiding it due to "welfare of the community."

"have always entered these transactions in Other Income not subject to SE tax with an adjusting entry for the expenses incurred"

Why wouldn't you do it as you've previously done it? What is different, this time? If that is personal yard, sure. Otherwise, it is producing sellable timber or farm land, right? Or in a conservation zone.

Don't yell at us; we're volunteers

Sign up

Login with SSO

Let's get you signed in

Login with SSO