Payments received from a utility for permanent access easement are not treated as income or taxed in the year received 1)2 ). Instead, the payment lowers the basis of the property. However, if the easement is considered part of your property and the utility company requires access to it, you may be liable for continuing property tax payments on your full property size. If you get money for easement rights, it's usually taxable income 3).
1) https://www.sapling.com/12068191/tax-treatments-easement
Utility easements are the more straightforward and traditional easements a residential property owner may come across. Your utility companies may need to use a portion of your property for telephone poles and wires, storm drains, electrical power lines or gas pipes below the surface. The utility companies compensate the property owner for permanent access, including possible damage to property in the contract when the easement is granted. Any payment received from a utility for permanent access easement is considered a sale of property, not treated as income or taxed in the year received. Instead, the basis of the property is decreased by the amount of the easement. This will affect the amount of annual depreciation and the capital gain subject to tax when you sell the property. In some cases, the city or utility may require temporary access to your property for maintenance, surveys or other reasons. payments for such access it is considered income, and should be reported on Form 1040, as other income.
2) https://ttlc.intuit.com/community/taxes/discussion/i-received-a-1099misc-for-proceeds-from-selling-a...
3)https://budgeting.thenest.com/easement-payments-taxable-income-32488.html
If you allow a temporary easement, even one that runs for several years, that usually counts as rental income and is taxed at the same rate as regular income.
3) another situation where the payment would be taxable would be when you are still required to pay real estate taxes on the easement but you negotiate with the utility to reimburse for these taxes
for taxable payments, you would likely get a 1099-MISC
you'll get a 1099-S so this would indicate a permanent easement. while not taxable it still needs to be reported. you would show cost equal to the 1099-S amount so no gain or loss.
