Easements and land leases are common in energy exploration and development, including pipeline construction. They are often obtained through eminent domain proceedings.
Whether a transaction granting a person or entity the right to use property results in capital gain or ordinary income depends on whether it is treated as an easement or as a lease of or license to use land.
The tax treatment of the sale of an easement differs depending on whether the property owner retains substantial rights to use the easement tract.
Easement agreements often include provisions for the payment of severance damages to land retained by the owner that can be offset against the basis of the land.
Amounts received under condemnation or threat of condemnation may qualify for nonrecognition of gain if they are reinvested as provided in Sec. 1033.
As exciting as this is, we know that we have a responsibility to do this thing correctly. After all, we want the farm to remain a place where the family can gather for another 80 years and beyond. This site was born out of these desires. Before we started this site, googling "shale' brought up little information. Certainly nothing that was useful as we negotiated a lease. Read More