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Tax Law (Questions About Taxes)/reporting income from oil pipeline easement


I received a check from a oil company for 52,899.00 for a easement across my property.  The Irs info they gave me said that 19,492.48 would be on a 1099S for right of way costs and 33,406.52 would be on a 1099Misc as damages.  How do I report this?


Thanks for your question.

The damages are not taxable income, but the amount must be used to reduce the basis in your property.  The 1099S amount is taxable income.  You would allocate basis from the entire property to this and pay tax (at capital gain rates) on the excess (or deduct a loss).  Assuming this is not business  it would be would be on Schedule 8949.

If it is your personal residence and you sell it within two years, there can be a different tax treatment, but that is too long and complex to cover at this point. If this is the case, send me a follow-up question with detail about your ownership and use of the property.

Hope this helps.

John Stancil, CPA

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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