How to treat income from a right of way for land

Received a one-time right of way payment (right of way and damages) for a gas line on a small peice of land.  Cannot find information on CRA site on how to treat - income, capital gain, reduce cost base?


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I would consult an accountant to be certain; as an accountant I would have many more questions to ask so providing a complete opinion would be difficult.  Also, there may be case law specific to this situation and I do not have access to case law history, so ... talk to an accountant that does.

That being said, if the taxpayer sold the land it would be a capital receipt.

If the taxpayer rented it, it would be income.

A one time payment of this nature, sounds like an 'Easement' was granted (perhaps forcibly) by the taxpayer and a one time payment was received.  This is not really a sale of land but a sale of a 'right' for the gas company to run a line; this affect the value of the land because it reduces the types of things that the landholder can do with it.  I personally consider the sale of an easement on land to be a Captial transaction.  

Now this is where it gets complicated....  The amount received would be the proceeds of disposition.  The ACB of the "easement' sold would probably be calculated as:
 - The value of the land without the Easement
 - Less:  The value of the land with the Easement

Which would require appraisals to be done.  Hence the complication.
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