My wife received a 1099-Misc. The amount she received is listed in Box 3 - Other Income. This money was paid for an option to purchase a "right of way" easement on some property she owns. The option gives a gas transmission company the right to purchase a right-of-way on the property for a specified amount within a two-year period.
So, if a gas pipeline is built on the property within two years, there is a specified agreed payment for the actual right-of-way.
So how is the option payment handled for taxes?
If this were a straight up purchase of a right-of-way, it's a return on capital against the cost basis of the property. But because it's an option to purchase, it's gets complicated, and I haven't been able to find any examples on how it's handled for tax purposes.
