I own land with my mom and my brother. It is grazing land in South Dakota that is rented out. My mom is currently getting that income. The US Fish & Wildlife Service has a Grassland Easement Program we are planning to join. It will be a permanent easement on the land that it must stay as grassland.
I have a few questions:
1) is this payment considered a Capital Gain instead of income? Based on my research since it is a permanent easement it would be a Capital Gain.
2) Do we have to divide up the payment equally and each put 1/3 on each of our taxes? Or can we split it up anyway we want and that amount would be used for each persons taxes?
3) Are there any special rules due to the money coming from the Federal Government in relation to doing taxes?
4) Any rules that allow some of it to be shielded from taxes?
