What is the proper taxation of money received for a right of way or easement for a pipeline?
What is the proper taxation of money received for surface damages for a drill site location or a pipeline.
You would need to contact your personal tax advisor as to how this issue is related to you total overall income.
There is some information on the web about the difference between incidental damage in the lease terms vs. the right of "trespass". If surface land is taken to use as a pad site and you've been running cattle on the land then there is a cost to you regarding the pasture land that is no longer graze-able. You need to determine how much acreage a cow requires per year for pasturing and then that would be a basis of your damage(s). In my area a cow per 15 acres is a customary grazing amount. So in an easy example, if the Oil company needed 15 acres for a site, the surface owner would have to reduce his herd by one cow and this would be the basis of your net loss per year. Check with an accountant who is familiar with your area.
There may be some articles on the home page that will help.