Are options for easements reportable?

September 20, 2019

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Q.¬†We have a water conservation client who has purchased options to buy permanent easements for a pipeline. They started purchasing options about 10 years ago and got the advice at the time that they were not reportable because the character of the income could not be determined until the option was exercised or expired. Now they are moving forward with the project and will (1) buy new options to buy easements, (2) exercise some of their existing options to buy easements, and (3) let some of…

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