3

I received a $2,000 bonus for signing a Letter of Intent to sign a contract leasing our farm land to a solar energy developer. The lease ultimately fell through due to technical complications, but I did receive the $2,000 bonus. However, I have not received a 1099 form for this payment. My question is, must I still report this money on my tax return and if so, how?

Also, we had $1200 I attorney's fees for negotiating the contract that ultimately fell through. Are these legal fees deductible as an expense, and where would I list them?

2

I received a $2,000 bonus...

Gross Income is income from whatever source derived, including (but not limited to) “compensation for services, including fees, commissions, fringe benefits, and similar items.”

Adjusted Gross Income is defined as gross income minus adjustments to income.

My question is, must I still report this money on my tax return and if so, how?

Yes, and it would be on line 21 of your 1040 with supporting documentation.

Are these legal fees deductible as an expense, and where would I list them?

Yes, you would aggregate your deductible expenses and place these on your Schedule A. Instructions here.

Good Luck.

Edit: As Ben Miller pointed out in the comments, the deduction would be placed in either line 23 or 28 depending on the nature of the attorney (investment related or not).

  • 1
    I'm not sure this is right. Where exactly do you think he should deduct the legal fees on the schedule A? – Ben Miller - Reinstate Monica Mar 31 '17 at 16:24
  • Stated is the linked yes, "Generally, you deduct personal attorney fees as an itemized miscellaneous deduction on Schedule A of your Form 1040 tax return." Depending on the nature (investment or not) it would be either lines 23 or 28. – Liam Mar 31 '17 at 17:27
  • I was thinking that this would be business income/expense, going on a schedule C and allowing you to deduct the entire expense. What do you think? – Ben Miller - Reinstate Monica Apr 1 '17 at 8:56
  • On line 17 of the Schedule C? No, because this is a farm he would have to file a Schedule F, specifically line 32a. "You can include on this line fees charged by accountants and attorneys that are ordinary and necessary expenses directly related to your farming business." - Instructions from Schedule F. But this does raise a question between if this bonus is GI on the 1040, or should be reported on a Form 8919... – Liam Apr 1 '17 at 14:22

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.