Whenever a company issues a check for a Right Of Way agreement, what are the tax consequences at the end of the year. Is a portion of the amount subject to capital gains tax or the whole amount? Also in Oklahoma, is there a separate form to be filed if you live in another state?
I imagine if it’s similar to a lease bonus, the check amount will be counted as income and the company will give you a 1099 at the end of the year citing the amount they paid you.
Hey Derrick…you have to fill out a NON RESIDENT OKLAHOMA tax return as well as pay the Feds on the entire amount of the lease bonus you were paid. That’s what our CPA had us do when we were in a similar Situation.
Tax treatment depends on classification on 1099 form. Can be listed as rent or other income. Those are reported on Schedule E as ordinary income. Or you may receive a 1099 classifying as proceeds of real estate transaction and yen reported on Schedule D as capital gains. Some will report erroneously as Non-employee Compensation. You need to request a revised 1099 because otherwise this is earned income and require payment of social security and Medicare taxes on top of income tax.
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