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How to Report Land Purchase Option Payments on the 1099-MISC
April 8, 2025
Q. We make option payments to landowners granting us the right to purchase land. If we exercise the option, the payment goes toward the purchase price and is not reportable on the 1099-MISC. If we do not exercise the option, the payment is non-refundable and becomes taxable income to the landowner in the year the option lapses, which may be a different year than when the payment was made. How and when should we report these payments?
A.
(Answered by IOFM's third-party tax expert)
If the option…
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