Surface Damages Oil Well

[Hastin]

Client owns land where a oil well was being drilled.
The Drilling company sent him a check for $10,000
for surface damages for the well location.

They also sent him a Form-S Proceeds From
Real Estate Transactions. This is the form
the seller of a house would receive before they
changed the selling your house law.

I have a hard time seeing where this would be
taxable. If anyone knows oil & gas taxation or
any suggestions where I could find the answer
I would appreciate it.

[Gretel]

If client sells land later on he probably gets $10,000 or so less because of the damages. He received this money now and it is treated as land sale.

I have no idea though, if he can claim any basis. Probably not.