Basically, this is not taxable income, but it reduces your cost basis, which may result an increased capital gains taxes when you sell the property.
Since you are expecting to receive a 1099S, you need to report this on your tax return as though you sold part of your property to the utility company. Enter it under sales of other assets, not sale of your home. Use the purchase date as the date you bought the property, the selling date is the date of the easement, and the purchase price and the selling price are both the same amount of the payment on the 1099S. That will result in no taxable capital gain.
keep records with your other important tax papers for as long as you own the property +3 years after you sell. When you sell, you must reduce your cost basis by the amount of the easement payment. For example, if you bought the property for $100,000, and you are granting this easement for a payment of $26,000, then whenever you eventually sell the property, you will report that your adjusted purchase price was $74,000.
