In 2003,Terry purchased land for $150,000.In 2011,Terry received $10,000 from a local cable television company in exchange for Terry allowing the company to run an underground cable across Terry's property.Terry is not required to recognize income from receiving the $10,000 because it was a return of his capital invested in the land.

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The payment received by Terry is considered a non-taxable return of capital because it represents a reduction in the cost basis of the land.

In 2003,Terry Purchased Land for $150,000