capital gains on land sale.

This year I sold some land - vacant land, just wooded acres, no buildings or improvements. How do I report the capital gains to the IRS? Also - I received a 1099S which listed gross proceeds. Do I have to report the gross proceeds to the IRS or can I deduct selling expenses - real estate agent's commission - from the gross proceeds?

Thanks

Bunkerbill2,

Your gain is determined by subtracting from your sale price, your basis (what you paid for the land), and also subtract your expenses of the sale.

Use 1040 Schedule D.

If you owned the land for more than 1 year, your gain will subject to the more favorable Long Term Capital Gains Tax rates.

You would complete Schedule D columns:
a) Description of the property.
b) Date you acquired the property.
c) Date you sold the property.
d) Sales Price, use the 1099-S sales price.
e) Your basis in the property including the expenses of the sale.
f) Gain or (loss) subtracting column e from column d.

If you inherited the property, it is considered you had it long term.
Your basis would the value of the property on the date of death of the previous owner.